Bank of Korea freezes lending rate

SEOUL, March 12 (UPI) -- The Bank of Korea Thursday said it would keep its key lending rate at 2 percent, in part to leave room for further reductions if needed later.

"It is highly likely that economic growth will sharply fall," BOK Gov. Lee Seong-tae said, explaining the decision to freeze the rate for another month after six consecutive rate cuts, the Yonhap News Agency reported.

"The economic downturn is expected to be longer and deeper than previously anticipated," he said.

As global demand for Korean exports has waned, the country's economy contracted 5.6 percent in the last quarter, Yonhap said.

Economists said the bank's pause in rate cutting comes amid fears of deflating the won or triggering inflation.

Consumer prices in Korea rose 4.1 percent in February on an annual basis, up from 3.7 percent in January.