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Bank of Korea holds interest rates for eighth month as uncertainty dominates

By Christine Kim and Cynthia Kim

By Christine Kim and Cynthia Kim

SEOUL (Reuters) - South Korea's central bank kept interest rates unchanged for an eighth straight month on Thursday, opting for stability as it monitors uncertainties ranging from an unpredictable North Korea to global policy challenges and a political scandal at home.

The Bank of Korea's monetary policy committee held its base rate <KROCRT=ECI> steady at 1.25 percent, a media official said without elaborating. Governor Lee Ju-yeol is due to hold a news conference from 11:20 a.m. (0220 GMT).

All 20 analysts surveyed in a Reuters poll before the decision forecast the Bank of Korea would leave the base rate unchanged on Thursday.

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"The BOK is likely training its focus outside the country, as policy in the United States is still fluid while there are upcoming elections in Europe," said Kim Ji-na, a fixed-income analyst at IBK Securities.

"At this point it looks like the BOK will keep rates unchanged all year."

The central bank was widely expected to stand pat in the wake of North Korea's ballistic missile launch earlier this month.

Concerns over possibly heightening trade protectionism under President Donald Trump are also a factor for the BOK to observe closely as South Korean exports have begun to recover.

More long-term, the Bank of Korea has been eyeing steadily snowballing household debt. Data earlier this week showed the debt soared last quarter at its fastest annual pace in more than a decade.

The BOK is also waiting for the Constitutional Court to decide in coming weeks whether it will uphold parliament's vote to impeach President Park Geun-hye over an influence-peddling scandal.

Park is accused of acting with her long-time friend, Choi Soon-sil, to pressure big businesses including Samsung Group to donate to two foundations set up to back the president's policy initiatives. Park is also accused of allowing Choi to exert inappropriate influence over state affairs.

Both women have denied wrongdoing.

If Park is impeached, a presidential election will be automatically triggered within 60 days by constitutional law. This could mean many policy changes, including economic measures, and the central bank is unlikely to change policy amid such uncertainty.

(Additional reporting by Dahee Kim; Editing by Eric Meijer)