Key interest rate frozen for 16th month

The central bank held its key interest rate steady for the 16th month in a row on Thursday, amid heightened economic uncertainty from Europe's debt crisis.

Bank of Korea (BOK) Gov. Kim Choong-soo and other policymakers froze the benchmark seven-day repo rate, dubbed the base rate, at a record low of 2 percent for June.

The nation's economy is recovering on the back of robust exports and improving domestic demand, but Europe's sovereign debt crisis has heightened economic uncertainty, raising concerns that it will curb the global economic recovery.

After presiding over the G20 ministerial meeting during the weekend, Finance Minister Yoon Jeung-hyun said eurozone debt concerns are causing some countries to delay the timing of their exit strategies.

But the need to normalize the exceptionally low rates is increasing as the Korean economy chalked up a surprise 2.1 percent on-quarter expansion in the first quarter and the recovery would put upward pressure on inflation down the road.

Last month, Gov. Kim expressed confidence about the country's economic recovery, hinting that a potential rate hike may not be far off.