Bank of Korea extends record low rate

SEOUL: South Korea's central bank left its key interest rate unchanged at a record low Tuesday for a sixth straight month and said it's too early to consider raising borrowing costs as the country emerges from its worst slowdown in over a decade.

The Bank of Korea kept the benchmark seven-day repurchase rate at 2 percent at a regular monthly policy meeting. The central bank had slashed the rate six times since early October to help battle the effects of the global financial crisis.

South Korea's export-driven economy, battered by declines in global consumer demand, has been grappling with its worst slowdown since the 1997-98 Asian financial crisis.

But the economy grew 2.3 percent in the second quarter amid signs government and central bank efforts to stimulate demand are working.

The growth was the fastest in 5{ years.

The result marked a sharp gain from a 0.1 percent expansion in the first quarter and a 5.1 percent contraction in the fourth quarter.

In a statement, the bank's policy committee said that increased government spending and low interest rates combined with improvements in emerging markets were helping to boost South Korea's economy.

But it was cautious about the outlook.

"There still remains uncertainty as to the economic growth path due to the likelihood of delay in the recovery of the major advanced economies," the statement said.

The committee said it will stick to its "accommodative policy stance for the time being" - indicating the key interest rate would stay low for now.