South Korea's central bank froze its key interest rate for the second straight month Thursday, saying that a sharp fall in economic activity has moderated.
In a monthly policy meeting, the Bank of Korea (BOK) left the benchmark seven-day repo rate unchanged at a record low of 2 percent, as widely expected, according to Yonhap News Agency. Between October and February, the BOK had made six consecutive rate cuts totaling 3.25 percentage points.
"Although domestic economic activity has not pulled out of its downturn, some indicators point to the moderation of the abrupt slowdown of the last few months," the BOK said in a statement. "Some business economic data hint at a slowdown of the downward trend of economic activity."
The rate freeze comes amid rising optimism that Asia's fourth-largest economy might be bottoming out.
In February, the country's industrial output sank 10.3 percent from a year earlier, easing from a 25.5 percent fall the previous month. Production gained 6.8 percent month-to-month in February after posting a 1.6 percent advance in January.
South Korea's trade surplus reached a record $4.6 billion in March as imports declined faster than exports, prompting the local currency to gain almost 11 percent to the greenback last month.
On Wednesday, the government said that the Korean economy might have hit bottom in the first quarter or will do so in the current quarter.
"Concerns over the economy have somewhat subdued as indicators like factory output showed a better-than-expected improvement," Lee Sung-kwon, an economist at Goodmorning Shinhan Securities, was quoted as saying. "The won's strength to the dollar in recent sessions also eased upward pressure on inflation."