* Base rate kept at 2.50 pct (Reuters poll: 2.50 pct)
* Lawmakers pressure c.bank for more easing
* Most analysts see rate hike in late 2014
* C.bank keeps 2014 GDP f'cast at 3.8 pct, sees 2015 GDP at
(Adds comments from lawmakers, analyst, central bank officials)
By Christine Kim and Se Young Lee
SEOUL, Jan 9 South Korea's central bank kept
interest rates steady and expressed confidence the economic
recovery was on track, suggesting it would not shift policy
direction in the near term despite potential risks from the
Fed's stimulus reduction.
But growing political pressure on the Bank of Korea for
further easing to support the economy could heighten uncertainty
over its future policy trajectory, particularly as the current
central bank chief's four-year term nears its end.
The Bank of Korea's monetary policy committee held its base
rate at 2.50 percent for an eighth straight month
by a unanimous vote, the central bank said on Thursday.
Most analysts had expected the central bank to stand pat as
it waits to see how the Federal Reserve's tapering of its
bond-buying programme affects global financial markets and
capital flows in emerging economies. Policymakers are also
monitoring the impact of the weak Japanese yen on South Korean
But analysts largely see the central bank raising rates late
this year, from their lowest level since early 2011, amid signs
that Asia's fourth-biggest economy is strengthening and
inflation is picking up.
"Compared with the past, I believe a lot of uncertainties
have cleared and I believe global growth forecasts will be
raised in the future," Kim Choong-soo, the central bank's
governor, told a news conference after the policy decision.
The Fed's decision to dial back its stimulus reflected an
improving U.S. economy and this would eventually spell out
better conditions for South Korea as well, he said, expressing
optimism the domestic economy will keep gathering momentum.
Lawmakers, however, are starting to call on the central bank
to do more, saying there is room and the need for another rate
"I believe a policy rate cut is needed to boost investment,"
a lawmaker from the ruling Saenuri Party told Reuters following
the rate decision, declining to be identified. "There is room
for a 25-basis-point rate cut given the inflation levels, and
there is a consensus within the party on this."
That followed comments the previous day by Saenuri lawmaker
Chung Woo-taik at a party leadership meeting calling for
"groundbreaking" policy easing by the central bank.
Some investors had been betting on a surprise rate cut
following a Goldman Sachs report this week that said the central
bank could cut rates as early as Thursday to boost growth.
The lead three-year bond futures contract fell in
response to the rate decision as investors unwound those bets,
although the won and Seoul shares showed little
reaction to the announcement.
President Park Geun-hye has yet to name a successor for Kim,
whose term ends in March. Some analysts say the confirmation
hearings for any candidate the Park administration puts forward
could be contentious, clouding the outlook for the central
bank's future policy direction.
"To really assess the central bank's monetary policy for
this year, we have to know what the new governor has in mind and
there are many political issues," said Lee Min-koo, economist at
NH Investment & Securities. "Still, it doesn't make much sense
to cut rates given current conditions."
Indeed, upbeat data has made the central bank more confident
in recent months that the economy is poised for a slow but firm
recovery this year.
Consumer sentiment held steady at its highest since early
2011 in December, reflecting increased confidence to among
households to spend.
And exports have so far been resilient despite a surge in
the won versus the yen and the dollar that threatens the
competitiveness of export-oriented firms. Exports rose a
better-than-expected 7.1 percent in December from a year
The central bank cited potential for greater volatility in
the yen's exchange rate as a downside risk and said it would
closely monitor the won's rate against the dollar and the yen.
But Kim told reporters that targeted measures at helping
industries most affected by the yen's depreciation would be the
appropriate policy response, suggesting the central bank is not
keen on direct foreign exchange intervention.
Inflation remained at an average annual rate of 1.3 percent
in 2013, far below the central bank's inflation target band of
2.5 to 3.5 percent. But annual inflation is expected to come
within the target in the second half of this year.
The central bank also released its latest growth and
inflation forecasts. In 2014 it expects the economy to grow 3.8
percent, unchanged from its previous forecast made in October,
and sees inflation at 2.3 percent. Next year it sees the economy
growing 4.0 percent and inflation at 2.8 percent.
(Additional reporting by Lee Shin-hyung; Editing by Chris