South Korea on Thursday left its key interest rate unchanged, with officials saying the economy was recovering from a slowdown caused by strikes and bad weather in recent months.
The Bank of Korea left the September target for the overnight call rate at 4.5 percent, a five-year high, after unexpectedly jacking up the benchmark rate last month.
"Construction investment is slow and private consumption has momentarily faltered on its growth path but exports still retain strong growth and capital spending is maintaining its upward momentum," the central bank said in a statement.
"Prices, in general, are stable, although inflationary pressure still exists because of the ongoing economic recovery and high oil prices." Consumer prices were 2.9 percent higher than a year earlier in August.
The economy in April-June grew at its slowest quarter-on-quarter rate for over a year, hindered by weakness in the construction sector and reduced farm output, sparking concerns that a hard-won recovery was running out of steam.
Gross domestic product grew 0.8 percent quarter-on-quarter - the slowest rate since 0.5 percent in the first quarter of 2005. In the first three months of this year, GDP grew 1.2 percent. Year-on-year, GDP grew 5.3 percent in the second quarter, down from 6.1 percent in the first.
However, the central bank has maintained its 4.4 percent growth forecast for the second half and five percent for the full year. Central bank governor Lee Seong-Tae played down fears of a business downturn.
"The economy has largely been moving along the path we expected earlier," Lee told reporters. He said sales of consumer goods and auto production, which were hit by bad weather and strikes in July, were recovering in August and September.
"The Bank of Korea's short-term economic forecast is that the economy will continue its growth, though at a moderate pace," he said, noting that oil price rises and the appreciation of the won had been easing considerably.
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