South Korea's central bank has frozen its key interest rate for the fifth straight month at a record low 2 percent, saying Asia's fourth largest economy is emerging from the global slowdown.

The Bank of Korea had made six consecutive rate cuts totalling 3.25 percentage points to the seven-day repo rate between October and February to prop up the export-dominated economy.

"The economy is getting out of the current slowdown and is expected to improve, but there still exists a high degree of uncertainty about any quick recovery," the central bank said in a statement.

The bank said consumer prices are expected to maintain their downward trend for some time, but it also highlighted the recent rise in oil prices.

It said that while foreign exchange and stock markets have stabilised, concerns about credit risks remain -- with increased lending to households including mortgage loans.

The bank said it would maintain its accommodative monetary policy for the time being and focus future policy on bolstering growth and stabilising the financial markets.

Last month the finance ministry said the downturn has eased and it now expects a contraction in GDP of 1.5 percent this year, compared with the 2 percent shrinkage predicted earlier.

The June annual inflation rate of 2 percent was the lowest for 22 months, easing fears that price rises could hamper a recovery bolstered by stimulus spending.