By Christine Kim and Se Young Lee
SEOUL, Feb 14 (Reuters) - South Korea's central bank held interest rates steady for a fourth straight month on Thursday, in line with market expectations, as the world's biggest economies show signs of improvement and domestic inflation remains low.
A survey conducted by Reuters prior to the rate decision had 17 analysts out of 21 forecast the Bank of Korea would keep the base rate unchanged at 2.75 percent, although they were divided on what the central bank will do next.
Meanwhile, fewer economists in total said they saw another cut as likely this year compared to a similar survey done in January, as economic conditions outside the country improve.
The rest either saw the bank hiking rates towards the end of the year or holding them for the rest of 2013, and several said there was no reason for rates to be lowered when they were held steady in January even as growth forecasts were cut.
'External factors are not as unfavourable as they were and market uncertainty concerns are decreasing,' said Kim Sang-hoon, a fixed-income analyst at Hana Daetoo Securities in Seoul, adding that unless the strong won trend continued, 'which I think is highly unlikely, the Bank of Korea will hold rates steady for all of 2013.'
The Bank of Korea's decision comes as the world's biggest economies have been showing signs of recovery, with Chinese exports and imports surging in January and new U.S. jobless claims in January showed improvement in the labour market.
As trade partners' economies began to recover, export-led South Korea's trade rose more than expected in January and industrial output in December beat expectations to growth for a fourth straight month.
The central bank said in its 2013 policy statement late last year that due to entrenched domestic problems, it would concentrate on supporting economic growth as recovery in the economy, Asia's fourth-largest, would be slow.
February's rate meeting was the last during the administration of outgoing President Lee Myung-bak before his successor, Park Geun-hye, takes office on Feb. 25.
Despite the myriad problems she faces in office, Park has yet to announce detailed policies to support flagging job growth and ease the household debt burden in South Korea - two festering problems she has vowed to beat.
(Editing by Eric Meijer) Keywords: KOREA ECONOMY/RATES
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