BOK governor hints call rate cut

Bank of Korea (BOK) governor Chon Chol-Hwan said Monday that the central bank would place priority in its monetary policy on commodity price stabilization and take a flexible approach to setting the call rate.

Financial experts here said Chon's remarks hint that the call rate, which currently stands at 5.25% per annum, may be lowered at the Monetary Board meeting on Feb. 8. The BOK regards the call rate, the rate applied in the call market where financial institutions borrow or lend one-day short-term funds to each other, as its standard rate for the operation of monetary policy.

Noting that the central bank would implement monetary policy flexibly to stabilize commodity prices and prevent an excessive economic slowdown, Chon said that the BOK aims to protect enterprises suffering from serious financial shortages.

At the Monetary Board meeting held on Jan. 11, the central bank decided to maintain the current interest rate despite the government¡¯s position that an interest rate cut was desirable to boost the economy.

The BOK said that pulling down interest rates amid instability in the won's value against the dollar might cause inflationary pressure.