Exhibiting the widely expected caution on the outlook for the embryonic economic recovery, after having faced the worst slowdown in decades, South Korea’s central bank – Bank of Korea - Tuesday kept its yardstick seven-day interest rate unchanged at a record-low 2.0 percent for the sixth month in a row.

Saying that the country was still at too early a stage into the economic recovery to consider an increase in borrowing costs, Bank of Korea said at its regular monthly policy meeting that the decision to slash the repurchase rate for the sixth times has been taken with the objective of combating the lingering effects of the global economic crisis.

In its statement, the bank – having cut its key rate by 3.25 percentage points during the October-February period - said: “Domestic economic activity is sustaining its improved movements, thanks to the proactive fiscal and monetary policy, and the upturn of the economic situation in emerging markets. However, 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 bank’s decision to keep its key interest rate unchanged fell in line with the economists’ expectations, who also opined that the bank may likely go in for a rate hike in the 2010 first quarter to control inflation.