The Bank of Korea kept its key interest rate unchanged for the fourth consecutive time as inflation seems to be on the wane.

The central bank decided to hold the rate at 3.5 percent at its rate-setting meeting on Thursday, keeping the base rate steady since February.

The BOK’s decision falls in line with the market projection which assumed the central bank would maintain the rate as the consumer prices growth in June fell to the 2 percent range for the first time in 21 months.

Korea’s consumer prices rose 2.7 percent last month on-year, marking a 0.6 percentage point drop from the month before. Core inflation, excluding volatile food and energy prices, also dropped to 3.5 percent, down 0.4 percentage point from a month before.

With the rate freeze, the policy rate gap between Korea and the US was maintained at 1.75 percentage points. If the US Federal Reserve lifts the rate by 25 basis points at its next meeting later this month, the gap will widen to 2 percentage points.

The next rate-setting meeting held by the Bank of Korea will take place on Aug. 24, following the Fed's Federal Open Market Committee meeting, set to be held July 25-26.