SEOUL, May 23 Reuters South Korea39;s central bank held interest rates at a 15year high on Thursday and struck a balanced policy tone while reiterating risks around inflationary pressures in the wake of strongerthanexpected economic growth.

Governor Rhee Changyong said for now the Bank of Korea will continue to keep policy restrictive at the current 3.50 benchmark rate amid sticky inflation and the surprise firstquarter growth performance.

There are expectations for interest rate cuts in the second half, but uncertainties over the timing of it is now even greater, Rhee told a press conference soon after the BOK unanimously held its key rate steady, as expected by all 43 analysts polled by Reuters.

It39;s not like growth is excessively hot so it is desirable to normalize restrictive interest rates should inflation stabilizes to the target level which we are hoping for.

The BOK also raised growth forecast for this year to 2.5 from 2.1 after Asia39;s fourth biggest economy grew at its quickest pace in two years in the first quarter.

The bank kept its February inflation outlook for this year at 2.6, as the impact from stronger growth was not seen big enough to alter the forecast, Rhee said.

South Koreas policysensitive threeyear treasury bond futures started to rise after the BOK kept its inflation forecast for this year and extended gains to as much as 0.13 points to 104.54 during Rhees news conference.

There is some relief in the market that the BOK maintained its…