SEOUL, South Korea -- South Korea's central bank left its key interest rate on hold Friday even as it stressed that inflation pressure, which sparked earlier rate hikes, shows no sign of waning. Stocks dropped as foreign investors led selling. The Bank of Korea's monetary policy committee kept the base rate at 2.75 percent at a monthly meeting. The rate influences a variety of interest rates including those on overnight loans between financial institutions and more broadly on items such as mortgage and credit card debt. The decision was closely watched with attention focused on whether the BOK would carry out two consecutive rate increases for the first time in more than three years in a bid to control rising prices. It unexpectedly raised the rate in January for the second time in three months. in Seoul, said the BOK was likely to increase it three more times in 2011 from March, which would take the base rate to 3.5 percent by the end of the year. "The policy statement maintains a hawkish stance" and signals further tightening, he wrote in a comment on the decision. South Korea's economy recovered strongly last year, growing 6.1 percent after a mere 0.2 percent expansion in 2009 during the global economic slump. Growth is expected to slow to 4.5 percent this year, according to the BOK. The South Korean government, meanwhile, says the economy could grow about 5 percent. The BOK had slashed the base rate a total of 3.25 percentage points between October 2008 and February 2009 to a record low 2 percent as it joined other central banks in fighting the global financial crisis. It began unwinding from the ultra-loose monetary policy in July last year when it lifted the rate to 2.25 percent amid solid growth prospects and budding inflation worries.

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