The Bank of Korea kept its key rate steady for the 10th straight month on Friday amid lingering concerns about sticky inflation and slow economic recovery in the developed world. The move was widely expected by economists.
The Bank of Korea Governor Kim Choong-Soo said that its Monetary Policy Committee unanimously decided to hold the benchmark seven-day repo rate at 3.25% for April.
South Korea's consumer inflation fell to a 20-month low of 2.6% in March.
Inflation expectation - a key gauge for rate policy decisions - has hovered around the upper limit of the bank's 2-4% target range over the past year.
"The inflation expectation that has been remaining high...and geographical risks in the Middle East as well as European debt woes still remain as risk factors," the Bank of Korea said in a statement.
The BOK is likely to keep rates unchanged this year as the country's export-driven economy remains vulnerable to downturns in its major export markets, including the EU.