The Bank of Korea's monetary policy board on Thursday decided to keep the nation's benchmark interest rate unchanged at 2.00 percent for the third straight month, in line with expectations.
That follows the bank's decision in October to trim rates by 25 basis points following no change in September. The BoK also pared the rate by 25 basis points from 2.50 percent in August.
Prior to that, the central bank had kept the rate unchanged for 14 straight meetings - since May 2013, when it trimmed rates by 25 basis points from 2.75 percent to 2.50 percent.
"The committee forecasts that the global economy will sustain its modest recovery going forward, centering around the US, but judges that the possibility exists of its being affected by changes in the monetary policies of major countries, by the weakening of economic growth in the euro area and China, by financial and economic unrest in the oil-producing countries, and by geopolitical risks," the bank said.
Low inflation - fueled by tumbling oil prices - allowed the bank to hold steady as it examines the results of the stimulus already in place.
Consumer prices in South Korea were up just 0.8 percent on year in December, down from 1.0 percent in November. Core consumer prices were unchanged at 1.6 percent.
The central bank's target range for 2014 continues to be at 2.3 percent after showing just 1.3 percent in 2013.
"The committee forecasts that inflation will gradually rise from the second half of this year, after remaining at a low level despite the hike in cigarette prices under the influence for example of international oil price movements," the bank said.
Recent economic data also played a role in the bank's decision to stand pat as South Korea cut its growth forecast because consumer and investment sentiment in the private sector weakened.
The forecast for economic growth in 2015 was downgraded to 3.8 percent from the 4 percent growth projected in July.
The GDP projection for 2014was also revised to 3.4 percent from 3.7 percent. In 2013, the economy had grown 3 percent.
"Looking ahead, while supporting the recovery of economic growth the committee will conduct monetary policy so as to maintain price stability over a medium-term horizon and pay attention to financial stability. In this process it will closely monitor external risk factors such as international oil prices and shifts in major countries' monetary policies," the bank said.
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