* What: South Korean central bank reviews interest rates
* When: Friday, Jan. 9, at around 10 a.m. (0100 GMT)
* 50 bps cut seen, policy easing cycle to continue
By Seo Eun-kyung
SEOUL, Jan 6 (Reuters) - South Korea's central bank will probably slash its benchmark interest rate on Friday by 50 basis points to try to head off the country's first recession since the Asian financial crisis a decade ago, a Reuters poll showed.
The Bank of Korea reiterated on Sunday it will use its interest rate policy to support an export-led economy that some analysts say could slip into recession this year as the global financial crisis crimps world trade. [ID:nSEO337753]
With an unprecedented series of rate cuts totalling 2.25 percentage points since October doing little to ease a persistent credit crunch or bolster flagging domestic demand, the central bank is under pressure to keep cutting rates, analysts said.
"Given the clear policy direction outlined earlier and latest bleak economic indicators, the central bank will likely continue to slash rates for a few more months," said Kwon Goo-hoon, an economist at Goldman Sachs.
The Reuters poll showed that 8 of 10 analysts expected the Bank of Korea to cut its base rate on Friday by 50 basis points to 2.50 percent, which would be the lowest level since it began setting monthly interest rate targets in May 1999.
The remaining two respondents in the survey forecast a 25-basis-point cut.
Over the next six months, rates would fall to 2.00 percent or lower, the poll showed. Even then, more rates cuts could be needed.
"If the economic recovery comes in too late or weak, the central bank could not afford an interest rate of even 2.00 percent," said Oh Suk-tae, an economist at Citibank.
Some analysts have forecast that the economy could shrink this year alongside the likes of the United States, Japan and Europe.
The Bank of Korea projected in early December that the economy would grow in 2009 by 2 percent, while the finance ministry has set a 3 percent growth target.
Economic growth slowed from 5.0 percent in 2007 to an estimated 3.7 percent in 2008, the central bank said.
The president warned late in December that the economy may shrink in the first half of 2009, signalling the first recession in Asia's fourth-biggest economy since the 1997-98 Asian financial crisis. [ID:nSEO263525]
The government has announced a series of measures, including aggressive fiscal spending and additional tax cuts, to shore up the economy and has pledged to carry out more steps if necessary. [ID:nSEO89677]
Separately, the central bank is also expected to approve a proposal on Friday to finance half of a 20 trillion won fund aimed at recapitalising local banks so that they could boost lending to cash-strapped companies and households. Poll results:
DECEMBER 6-MTH OUTLOOK SC First Bank down 50 bps down 100 bps Korea Investment & Securities down 50 bps down 100 bps Hana Daetoo Securities down 50 bps down 75 bps JP Morgan down 50 bps down 50 bps Citibank down 50 bps down 50 bps NH Investment & Securities down 50 bps down 50 bps Woori Investment & Securities down 50 bps down 50 bps DBS Bank down 50 bps down 25 bps Goldman Sachs down 25 bps down 75 bps Kiwoom.com Securities down 25 bps down 75 bps (Additional reporting by Lee Eun-yul; Editing by Neil Fullick)