The Bank of Korea's monetary policy board decided to keep its base rate unchanged at 1.50%.

The bank said solid domestic growth has continued on the back of strong consumption and export growth. Investments, however, will slow.

Long-term market interest rates have increased, reflecting changes in interest rates in major countries. Expansion in household lending has lessened somewhat, but sustained its higher rate of expansion than in past years.

Consumer price inflation has risen to the upper-1% level, mainly due to faster price increases in agricultural products and to the ending of a temporary reduction in electricity fees.

"As it is forecast that inflationary pressures on the demand side will not be high for the time being, and that the domestic economy will sustain a rate of growth that does not diverge significantly from its potential level, the board will maintain its accommodative monetary policy stance," said the bank.