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S. Korea keeps key rate unchanged for fourth month


South Korea's central bank kept its key interest rate unchanged for the fourth straight month Thursday as inflation remained subdued and the economy continued to show signs of strengthening.

The Bank of Korea's decision to leave the benchmark inter-bank lending rate at 2.75 percent -- after two cuts in July and October last year -- was in line with most analysts' expectations.

Inflation in Asia's fourth-largest economy has remained somewhere between one to two percent from last November (Xetra: A0Z24E - news) to January this year, well below the central bank's comfort zone of 2.5 to 3.5 percent.

Analysts say the South's export-reliant economy likely bottomed out in the third quarter of last year and has been improving since then, helped by state stimulus and signs of a recovery in its top export market, China.

Exports grew last month at the fastest pace in 11 months and industrial production rose for a fourth consecutive month in December.

"The economy has apparently bottomed out in the latter half of last year and has shown signs of recovery so policymakers didn't view a further rate cut was necessary," said Lim Jean, analyst at the Korea Institute of Finance.

-- Dow Jones Newswire contributed to this report --