UPDATE 3-S.Korea c.bank cuts rates again to lift economy

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

* Second cut in four months as economy slows

* Bank of Korea seen lowering growth forecasts on Thursday

* Governor Kim due to hold news conference from 0220 GMT

(Adds statement, new inflation target, updates markets)

By Christine Kim and Se Young Lee

SEOUL, Oct 11 (Reuters) - South Korea's central bank cut interest rates for the second time in four months on Thursday to bolster the economy through a global slowdown, warning of continuing risks to growth and recovery likely to be slow.

The Bank of Korea's monetary policy committee cut its base rate by 25 basis points to 2.75 percent. Governor Kim Choong-soo is expected to hold a news conference from 11:20 a.m. (0220 GMT).

Analysts now expect the Bank of Korea to stay on hold for some time unless conditions worsen significantly. It sees the economy recovering gradually and would want to save some policy power to respond to even more difficult conditions.

The committee expects the pace of global economic recovery to be very modest going forward and judges the downside risks to growth to be large," the BOK said in its policy statement, flagging the euro zone fiscal crisis and worries about ballooning U.S. sovereign debt as key factors.

"There will be no more rate cuts this year," said Park Sang-hyun, chief economist at HI Investment & Securities.

"I agree with the finance minister that our economy has hit bottom during the third quarter. However, the most important factor is how strongly our economy will recover."

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Analysts' comments Graphic Stories on South Korean economy ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> GROWTH FORECAST SEEN CUT

December futures on three-year treasury bonds gave up their initial gains following the rate cut, trading down 0.04 point at 106.49 by 0203 G M T. The won and local shares

moved little.

The central bank also lowered the interest rate for its special loan programme for smaller firms to 1.25 percent from 1.50 percent in line with the reduction in the policy rate.

The decision, which brought the base rate to the lowest in 19 months, was in line with the market's expectations: 22 out of the 24 analysts surveyed by Reuters had predicted a cut, while the remaining two saw no change.

In July, the central bank trimmed the rate by a quarter point from 3.25 percent in a surprise move and for the first time in more than three years, ending a tightening drive that had lifted the rate by a total of 125 basis points.

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

The central bank also set its new inflation target for the 2013-2015 period at between 2.5 percent and 3.5 percent as the previous three-year target of 2 percent to 4 percent expires at the end of this year.

Trade powerhouse South Korea has seen its exports and imports fall for many of the past nine months on an annual basis as Europe's protracted debt crisis dented demand there and elsewhere, in turn hitting local consumer spending.

The economy now looks set to see quarterly growth in the July-September period at a similar pace to the second quarter, when expansion plunged to 0.3 percent from 0.9 percent in the January-March period.

South Korea's economy derives just more than half of its annual output from private consumption but exports wield a strong influence across the economy as households and companies rely heavily on export income.

Exports fell year-on-year in each of the past three months, and industrial output contracted in each of the three months until August month-on-month, indicating growth in the third quarter would be at a low level.

The government-run Export-Import Bank of Korea, specialising in trade financing to local firms, said on Thursday that fourth-quarter exports would probably fall by around 5 percent year-on-year after a 5.6 percent decline in the third quarter.

The Bank of Korea is now expected to lower economic growth forecasts for this year and next later on Thursday as its latest projection of 3 percent growth made in July for this year is widely seen as too optimistic.

On Monday the International Monetary Fund lowered its annual growth forecast for South Korea's economy for this year to 2.7 percent from 3.0 percent in its revision of global economic forecasts.

The annual rates of consumer and producer inflation both rose in September from August but stood far below the central bank's 3 percent target as the uncertain global economy dampened demand locally, allowing the authorities to ease policy.

($1 = 1114.6500 Korean won)

(Editing by Choonsik Yoo and Eric Meijer)

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