UPDATE 4-S.Korea c.bank cuts rates, seen on hold for while


* Base rate cut by 25 bps to 2.75 pct (vs 2.75 pct forecast

* Second rate cut in four months as economy slows

* C.bank slashes 2012-2013 growth forecast

* Most analysts don't expect additional rate cut this year

(Updates after news conference)

By Christine Kim and Se Young Lee

SEOUL, Oct 11 (Reuters) - South Korea's central bank cutinterest rates as well as growth forecasts on Thursday, asexpected, and its projection of an economic rebound next yearaffirmed a market expectation it was not likely to ease policyagain soon.

Bond prices tumbled as investors took the widely expecteddecision as a chance to cash in on recent gains while the won

pared losses as the Bank of Korea's views eased concernsabout the local economy slipping further down.

The Bank of Korea's monetary policy committee cut its baserate by 25 basis points to 2.75 percent, its secondeasing in four months, taking the rate to its lowest in 19months and just above next year's expected inflation figure.

It now sees Asia's fourth-largest economy growing only 2.4percent this year before picking up to growth of 3.2 percentnext year, compared with the previous forecasts set in July for3.0 percent and 3.8 percent, respectively.

"We believe both economic growth and inflation have hittheir bottom in the third quarter and will now head upward,though very slowly," said Young Sun Kwon, economist at NomuraInternational in Hong Kong.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Analysts' comments Graphic Stories on South Korean economy ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> RECOVERY AHEAD, THOUGH MODEST

December futures on three-year treasury bonds gaveup their initial gains and fell 0.07 points on the day to 106.46by 0427 GMT as the Bank of Korea failed to provide clearindication of an additional cut in the near term.

"The committee expects the pace of global economic recoveryto be very modest going forward and judges the downside risks togrowth to be large," the central bank said in its policystatement.

South Korea's economy is heavily reliant on exports butFinance Minister Bahk Jae-wan said recently it has probablyreached the bottom of its trough in the third quarter.

In the second quarter, private consumption by value was just1.3 percent above the average for last year and capitalinvestment was 0.5 percent less, in real, seasonally-adjusted,terms, indicating limited room for further decline.

The central bank also lowered the interest rate for itsspecial loan programme for smaller firms to 1.25 percent from1.50 percent in line with the lower policy rate.

The decision, which brought the base rate close to nextyear's inflation projection of 2.7 percent, was in line with themedian forecast in a Reuters survey of 24 analysts.

In July, the central bank trimmed the rate by a quarterpoint from 3.25 percent in a surprise move and for the firsttime in more than three years, ending a tightening drive thathad lifted the rate by a total of 125 basis points.

The central bank also set its new inflation target for the2013-2015 period at between 2.5 percent and 3.5 percent as theprevious three-year target of 2 percent to 4 percent expires atthe end of this year.

The BOK is the latest authority to join a wave of globalmonetary easing, as central banks look to counter thedebilitating effects of the protracted euro zone fiscal crisis.Brazil's central bank earlier Thursday cut its policy rate by 25basis points to a record low 7.25 percent.

(Editing by Choonsik Yoo and Eric Meijer)

((christine.kim@thomsonreuters.com)(822 3704 5665)(ReutersMessaging: christine.kim.thomsonreuters.com@reuters.net))