Call rate will be maintained at 5% level, emergency funding offered to banks

Monetary Policy Committee has decided to keep the call rate at the current level of 5% throughout July, just like the previous month.

Also, it plans to fix the interest rate of liquidity-adjusted loans, which will be effective starting August 1, at 4.5%.

Jeon Chul-Hwan, Governor of the Bank of Korea, said after the Monetary Policy Committee meeting Thursday that uncertainties about restructuring remain in the market despite the gradual relaxation of credit crunch. He noted that the central bank would focus on stabilizing the financial market by keeping the call rate at the current level.

Jeon said that the consumer price has soared in June, noting that the bank will closely watch the trend for about a month to see if the inflationary pressure will remain persistent.

Noting that the capital market is rather unstable now, Jeon said the bank has already secured 2.4 trillion won in credit fund. Still, there is a possibility that the question of labor, which was unpredicted, could trigger instability of the market.

Hyunjin Park witness@donga.com