South Korean consumers' sentiment seems to have recovered slightly following a series of boosting measures from the government, but manufacturers are still cautious in expanding their capital spending on lingering uncertainties, the country's chief central banker has said, raising chances for a further monetary easing in Asia's fourth-largest economy.

South Korea's central bank, the Bank of Korea (BOK), cut its policy rate by a quarter percentage point in August to 2.25 percent in a bid to shore up domestic demand that plummeted in the wake of April's ferry sinking that left more than 300 passengers, mostly high school students, dead or missing.

The South Korean government also rolled up its sleeves with a spate of stimulus steps, including an extra budget and easing on mortgage loans. 

But concerns are growing that the South Korean economy is still not on a recovery path, stoking speculation that the South Korean central bank will trim its base rate by another quarter percentage point to a record low of 2 percent in the coming months.

"Consumer sentiment has recovered to some degree, but it is hard to say manufacturers' overall sentiment has bounced back," BOK Gov. Lee Ju-yeol told a group of reporters Friday on the sidelines of an annual meeting of the International Monetary Fund (IMF) and the World Bank Group.

Lee said earlier that the August rate cut failed to raise corporate investment sentiment because the weak sentiment comes mainly from structural problems.

The top banker cautioned against "excessive expectations" for another rate cut, saying that doing so could have side effects on the economy, such as capital flight.

"We need to remain conservative when implementing economic policies," Lee said. "If we cross the red line, it costs us too much. When it comes to policy maneuvering, I think we should avoid (such bold and radical actions)."

In July, the central bank lowered its economic growth outlook for the year by 0.2 percentage point to 3.8 percent, factoring in the impact of the Sewol ferry disaster that pummeled consumer and business sentiment in South Korea.

Market players expect the central bank to additionally lower its growth outlook for the year given the current economic activities.

South Korea's economy expanded 0.5 percent on-quarter in the second quarter, the slowest pace in over a year, and increased 3.5 percent on-year in the April-June period, also marking the slowest clip since the third quarter of last year.

Other economic data also show economic situations are not improving as was expected. 

South Korea's industrial output shrank at the sharpest pace in nearly six years in August, raising worries that the economic recovery might be losing its momentum.

Production in the mining, manufacturing, gas and electricity industries fell 3.8 percent in August compared with July. This marked the largest on-month drop since December 2008 when it contracted 10.5 percent.(Yonhap)