Korea leaves interest rates unchanged


South Korea's economy is expected to grow by more than 4 percent this year

SEOUL, South Korea (CNN) -- The central Bank of Korea left its key interest rate unchanged at 4.0 percent Thursday on expectations of better economic times ahead.

The central bank says its 2001 GDP forecast is now 3 percent, with growth likely to hit 4 percent this year.

Regional analyst IMA Asia is predicting 4.8 percent growth in Korea this year and 7.5 percent in 2003.

"The economy is in better shape than two months ago. It's clearly in a rebound phase," Bank of Korea governor Chon Chol-hwan told reporters.

The bank's monetary policy committee left its overnight call rate target unchanged at 4.0 percent for February.

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South Korea is the second major economy in the region to keep rates steady this week.

On Wednesday, Australia's Reserve Bank left its benchmark cash rate at 4.25 percent, with analysts expecting the next move to be an increase in the second half of the year.

Reuters news agency reported that the Bank of Korea's decision was in line with a unanimous forecast of 10 economists it polled.

It also came one day after Moody's Investors Service announced it was reviewing a possible sovereign ratings upgrade for Korea.

Moody's has kept Korea's long-term foreign currency country ceiling at Baa2 since late 1999.