* Bank of Korea keeps rates at record low for 11th month
* Governor: higher rates not necessarily a tightening
* Governor: no change in stance from December meeting
* Tightening may be gradual amid government pressure (Updates with snap poll, markets)
By Seo Eun-kyung
SEOUL, Jan 8 (Reuters) - South Korea's central bank underscored on Friday its intention to raise rates as soon as February despite increased government pressure to avoid any hasty decisions for fear of derailing a recovery.
Still, the government's pressure may succeed in slowing down the pace of monetary tightening in 2010, when the economy is expected to grow at the fastest pace in the Organisation for Economic Co-operation and Development (OECD).
The government pressed its case on Friday by taking up its legal right for the first time in a decade to attend the Bank of Korea meeting, raising concerns about how that might affect the central bank's decisions.
Although Governor Lee Seong-tae held the policy rate at a record low of 2 percent, he reiterated the need to raise it to more "normal" levels and argued that doing so would not constitute tightening.
"What is interesting is that the governor at the press conference went out of his way not to pick a fight with the government," said Frederic Neumann, economist at HSBC in Hong Kong.
"We stand by our view that we'll get a 25 basis point hike before the governor leaves office, but it does appear as if interest rates will only rise gradually over the course of this year."
A Reuters poll conducted after the review showed a majority of analysts still expect the Bank of Korea to raise the 7-day repurchase agreement rate by the end of March.
Expectations that South Korea would become one of the first in Asia to raise rates heightened in December after Lee said a 2 percent policy rate was too low for an economy predicted to grow 5 percent this year.
Analysts and investors have said Lee wants to kick off the tightening cycle before leaving office on March 31 at the end of his term, as his successor -- to be appointed by the president -- is expected to be more pro-government than Lee.
GOVERNMENT PRESSURE
Short-dated interest rates edged lower, extending decline from Thursday when the government announced it would send a vice finance minister to upcoming policy meetings, reflecting views that the tightening cycle would only be gradual.
The finance ministry has the right to voice its views on the economy and policy via a representative at the policy meeting but it had not exercised it since 1999.
Lee refused to comment on the implications of Vice Finance Minister Hur Kyung-wook's attendance and it was not known what Hur, who has no voting rights, told the seven-member committee meeting.
He said policy would remain easy for some time even if it raised the rates from a record-low of 2.0 percent.
"The monetary easing continues as long as the base rate stands at a level in support of the economy after considering the real-economic sectors, and raising interest rates itself is not a tightening," he told reporters.
A robust outlook for Asia's fourth-largest economy, one of the few in the OECD to have dodged recession last year, has prompted analysts to predict the country would be among the first in Asia to begin raising rates.
The government wants to boost this year's economic growth to 5 percent from an estimated 0.2 percent last year by maintaining stimulus mechanism, while the Bank of Korea sees the economy growing by 4.6 percent.
The Bank of Korea slashed the 7-day repurchase agreement rate by a total of 3.25 percentage points over four months from October 2008 to shield the economy from the fallout of the worst global crisis in decades.