BOK Freezes Key Rate for March

South Korea's central bank on Friday left its key interest rate unchanged for the seventh straight month in March as it tries to balance rising inflation with growing concerns over a slowing economy.

The Bank of Korea (BOK) set its March target for the 7-day repo (repurchase agreements) rate at 5 percent, as widely expected.

Starting this month, the BOK has decided to change its benchmark rate from the call rate to the interest on 7-day repos to enhance the effectiveness of its monetary policy.

Repos allow the BOK to sell holdings of government bonds to financial firms with an agreement to buy them back on a specific date at a fixed price. The BOK has held the call rate, or the interest on overnight inter-bank loans, steady at 5 percent since its first back-to-back increases in July and August.

Economists said the rate freeze came as soaring oil and food costs have fueled the country's inflation while a possible U.S. recession is raising fears of a slowdown of Asia's fourth-largest economy.

South Korea's consumer prices rose 3.6 percent in February on high-flying oil and raw material costs, slowing from a 3.9 percent gain in January. Inflation breached the BOK's target range of 2.5 to 3.5 percent for a third month in a row. (Yonhap)