South Korea's central bank froze the key interest rate for the 11th straight month on Thursday amid an economic recovery at the first rate-setting meeting with its new chief at the helm.

Bank of Korea Gov. Lee Ju-yeol and his six fellow policymakers held the benchmark seven-day repo rate, called the base rate, at 2.5 percent as widely expected.

Gov. Lee, a former senior deputy governor at the BOK, replaced his predecessor Kim Choong-soo on April 1, vowing to operate the monetary policy in a consistent and predictable manner.

Lee earlier said that he will seek to strike a balance between keeping prices stable and supporting the economy that is on a low growth trend.

"The local economy is on the gradual recovery path, but uncertainty still lingers. Inflationary pressure remains low, reducing the need to change the monetary policy," said Ma Ju-ok, an analyst at Kiwoom Securities Co.

The central bank forecast the South Korean economy to grow 3.8 percent this year, close to its long-term growth potential, after advancing 3 percent last year. The BOK will unveil revised growth and inflation data later in the day.

Despite signs of economic recovery, Korea's inflationary pressure still remained tame. The country's consumer prices grew 1.3 percent in March from a year earlier, quickening from a 1 percent on-year gain in February but running below the BOK's 2.5-3.5 percent inflation target band for the 22nd straight month in March.

The International Monetary Fund on Tuesday lowered its consumer price growth outlook for South Korea this year amid concerns about global deflation. The IMF forecast Korea's consumer prices will grow 1.8 percent this year, below the BOK's estimate of 2.3 percent.

Although the world economy is recovering, external economic conditions are still murky. The U.S. Federal Reserve has been tapering its monetary stimulus bond purchases while concerns about China's economic slowdown persist.

Experts said that the policy rate is likely to remain unchanged for a considerable period of time, but the BOK's next move will be a rate hike.

"I think that one or two rate hikes may be possible through the first half of next year since inflationary pressure will pick up, " said Yoon Yeo-sam, a fixed-income analyst at KDB Daewoo Securities Co. (Yonhap)