South Korea's central bank kept its benchmark interest rate unchanged for a fifth straight month Thursday, despite concerns over whether growth in Asia's fourth-largest economy is back on track.
The Bank of Korea's (BOK) decision to leave the inter-bank lending rate at 2.75 percent -- after two cuts in July and October last year -- was in line with most analysts' expectations.
South Korea's export-driven economy grew 2.0 percent in 2012 -- the slowest pace in three years -- compared with 3.6 percent growth in the previous year.
The deceleration was largely blamed on sagging demand due to the eurozone debt crisis and a slowdown in China.
The central bank recently slashed its forecast for economic growth for this year to 2.8 percent from 3.2 percent estimated last October.
The economy has shown signs of picking up since the third quarter of last year, but analysts say slowing manufacturing activity in recent months suggests weak underlying conditions.
With inflation running at just 1.4 percent -- well below the BOK's target range of 2.5-3.5 percent -- the bank is expected to consider a rate cut by the end of the second quarter if the economy is still struggling.
Korean exporters complain that business has been hit by the weakness of the yen that has given a market edge to Japanese automobiles and electronics over their own products.