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S. Korea leaves interests rate at 2.25%

08-13-2010 08:32 BJT

South Korea's central bank left its key interest rate unchanged Thursday, a month after raising it from a record low. It's a decision prompted by the dim global economic outlook.

The Bank of Korea's decision to leave the benchmark seven-day repurchase rate at 2.25 percent was widely expected.

Kim Choong-Soo, Governor of Bank of Korea said "After looking at the overall domestic and international financial and economic situations in today's monetary policy committee meeting, we decided to operate our monetary policy with the same Bank of Korea base interest rate as its current level of 2.25 percent."

Government debt problems in some European countries have eased, but risks still loom.

Recent figures show the recovery in the U.S., the world's biggest economy, is slowing while China's rapid expansion is cooling.

Faltering recoveries in those countries could have global repercussions, as both are major consumers of exports from consumer electronics to iron ore to factory equipment.

But the Bank of Korea's governor says prospects of the global economy slipping back into recession are unlikely, despite the slow U.S. recovery.

Kim Choong-Soo said "Uncertainty still exists in the global economy when you look at the U.S. economy's recent slower-than-expected recovery speed. But key economic organizations and central banks predict the global economy doesn't face much danger of being hit with a double dip recession."

The decision to leave the rate on hold came after the bank's monetary policy committee decided to raise it from a record low 2 percent in July.

South Korea's benchmark stock index declined by 1.2 percent to 1,736.99. The South Korean won weakened by 0.8 percent after the rate decision.

South Korea's economy, Asia's fourth largest, has recorded six straight quarters of growth after contracting amid the worldwide downturn. It was propelled by record-low interest rates, government stimulus spending and robust exports.

Editor:Xiong Qu |Source: CNTV.CN

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