Korea Keeps Rate at Record Low Despite 5.2% Growth

South Korea’s central bank left its key interest rate at a record low Wednesday for a 15th straight month amid expectations the country’s economy will rebound strongly in 2010.

The Bank of Korea announced that it kept the benchmark seven-day repurchase rate at 2 percent. It was to issue a detailed statement later.

The decision was widely expected. All economists at 16 financial institutions surveyed by Yonhap Infomax, the financial arm of Yonhap news agency, predicted the result.

The BOK slashed the rate six times from October 2008 to battle the global financial meltdown and ensuing economic downturn. It lowered the borrowing cost to its current level in February of 2009.

South Korea has recovered strongly, recording five straight quarters of growth after contracting sharply at the end of 2009. Besides the record-low interest rates, Asia’s fourth-largest economy has benefited from government stimulus spending and robust exports as overseas markets recover.

The BOK expects South Korea’s economy to expand 5.2 percent in 2010, compared with growth of 0.2 percent last year. If achieved, such a growth figure would be the best in four years.

The decision to freeze borrowing costs also comes amid renewed concerns over prospects for the global economy due to debt problems in Greece and some other European Union countries.

The European Union and International Monetary Fund this week announced a gigantic $1 trillion rescue package to try and prevent Greece’s financial troubles from spreading to other countries seen as vulnerable and to defend the euro currency.

The Bank of Korea’s rate-setting monetary policy committee in its statement last month cited concerns over risk factors including debt problems in Europe.

SEOUL, South Korea (AP)