S. Korea freezes interest rates at record-low for 5 months

South Korea's central bank on Friday froze its benchmark interest rate at a record low for five straight months on expectations that the U.S. Federal Reserve would hike rates later this year.

Bank of Korea (BOK) Governor Lee Ju-yeol and six other policy board members decided to keep the seven-day repurchase rate on hold at an all-time low of 1.25 percent after cutting it to that level in June.

It was in line with market expectations as experts predicted the rate on hold amid uncertainties at home and abroad. According to a Korea Financial Investment Association (KFIA) survey of 100 fixed-income experts, 99 percent expected the rate freeze.

The U.S. Fed is widely forecast to raise its interest rate in December to normalize its prolonged zero-rate policy aimed at addressing the 2008 global financial crisis.

The U.S. rate hike could spark foreign capital outflow from South Korean financial markets as the BOK lowered its policy rate sharply from 3.25 percent in July 2014 to the current level in June this year. Endit