In a widely expected move, South Korea's central bank stood pat on its 2 percent base rate Thursday as it gauges the policy impact of two rate cuts earlier this year.

"Given that the committee should monitor the impact of two rate cuts and take heed of financial risks stemming from a rise in household debt, (the committee) judged it is desirable to keep the base rate at the current level," BOK Gov. Lee Ju-yeol told reporters in a news conference.

All policy board members voted for a rate freeze, he added. It marks the first unanimous decision since June. Board members had been split between holding the rate and lowering it in the past four months.

The rate freeze came after the Bank of Korea (BOK) lowered the policy rate by a quarter percentage point in August and October as part of efforts to bolster growth in Asia's fourth-largest economy.

Slowing growth momentum has been a major headache for policymakers as domestic demand has lagged and property transactions have failed to revive.

"In Korea, the committee judges that exports have sustained a favorable pattern, that indicators of domestic demand have been alternating between improvements and worsening, and that economic agents' sentiments have been sluggish," the policy board said in a statement.

The committee also noted overseas uncertainties such as "the prolongation of economic sluggishness in the euro area" and "weakening of economic growth in some emerging market countries."

In a separate press release, the BOK said while the Korean economy is expected to gradually improve, delays in the recovery of consumption and investment sentiment and increase in exchange rate volatility following policy shifts in major countries may work as destabilizing factors.

The consumer sentiment index in October dropped to the level of the post-Sewol period, when spending froze from national mourning over the ferry sinking, while the business sentiment index has also tumbled to a yearly low. 

A weakening yen caused by the Bank of Japan's surprise stimulus, seen as a threat to local manufacturers that compete with Japanese firms, has also turned into a new source of concern.

Last month, the BOK lowered its growth forecast for the year to 3.5 percent from 3.8 percent. It also trimmed its 2015 outlook to 3.9 percent from 4 percent.

Lee said that while an acceleration in the yen's weakening is a potential threat that can hurt local exporters' competitiveness, the extent of the fall is likely to be limited.

The BOK chief also challenged views forecasting a rate cut amid the weakening Japanese currency, saying market concerns over external uncertainties "may be excessive."

"Since there are many factors that affect the foreign exchange rate, we cannot use the base rate to cope with it. What we look at is not the level of foreign exchange rates, but its impact on price and the economy. We don't use the base rate to affect the foreign exchange rate," he said.

When asked about chances of adjusting the base rate by standards other than 25 basis point, the BOK governor said the current level is "appropriate" as a change may raise market uncertainties.

The latest policy decision is in line with a poll conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency.

While a weakening yen had stoked market anticipation of a rate cut, all 12 analysts who were surveyed forecast the central bank would keep the base rate on hold this month while a minority raised chances of a rate cut early next year. 

The poll showed that three of 12 analysts projected the base rate to stand at 1.75 percent by the end of March, while one forecast the base rate to reach 1.5 percent.

A majority of market watchers, however, projected the base rate to stand pat for the time being unless there are clear signs of economic slowdowns.

"We believe that the BOK has bought itself enough time through double cuts of the previous months, and that this space can last for a while more," Wellian Wiranto of OCBC wrote in a note to investors.

"Unless the Korean economy shows clearer signs of slowdown -- be it because of Europe's inaction of Japan's action -- the BOK will refrain from another rate cut." (Yonhap)