The Bank of Korea announced that it decided to leave the benchmark seven-day repurchase rate at 2.5 percent during a monthly monetary policy meeting.
The bank last month raised the rate from 2.25 percent, which was the second hike in four months.
South Korea's inflation rate hit 4.1 percent in October. The year-on-year increase in consumer prices was slightly outside the central bank's comfort zone. The bank's inflation target is 3 percent, though that includes what it calls a "tolerance range" of plus or minus 1 percentage point.
Inflation, however, eased in November, rising 3.3 percent from the same month the year before.
The bank's monetary policy committee welcomed the slowdown, but warned the trend is for rising prices to continue.
"Consumer price inflation has greatly decreased due to the stability of vegetable prices," the committee said in a statement. "However, upward pressures are expected to continue, being associated with the continued upswing in activity and the run-up in international raw material prices."
The bank's policy makers also expressed optimism about South Korea's economy, saying they expect it to show continued strength "even in the presence of external risk" including global financial market turmoil caused by sovereign debt problems in Europe.
South Korea, Asia's fourth-largest economy, has recovered strongly from the global financial crisis that began in 2008. The International Monetary Fund expects South Korea to grow 6.1 percent this year after last year's meager 0.2 percent expansion.
The Bank of Korea had aggressively cut the interest rate a total of 3.25 percentage points to a record low 2 percent between October 2008 and February 2009 as it worked with other central banks to fight the crisis and subsequent economic downturn.
The bank's monetary policy committee raised the borrowing cost to 2.25 percent in July amid solid growth prospects for the domestic economy and inflation concerns. Economists have said the bank is unlikely to engage in aggressive rate increases.
Thursday's decision was widely expected. All economists at 16 financial institutions surveyed by Yonhap Infomax, the financial news arm of Yonhap news agency, predicted the bank would leave the rate unchanged.
