Call Interest Rate Maintains Current 4 Pct.

The Bank of Korea (BOK) decided to maintain 4 percent of the call interest rate in March.

The Monetary Policy Committee of BOK also recommended the government to prepare countermeasures to prevent the surge of real estate price from resulting in inflation and decided to raise the interest rate if necessary.

Chun Chul-Hwan, the governor of BOK, unusually expressed his worries about the recent rapid surge of family loans.

MPC announced that even though it expects the domestic demand will lead the economic recovery, it decided to maintain the call interest rate, considering the consecutive decline of exports for 12 months. The monetary policy will be operated flexibly by the changes of the economic recovery speed, price, and the foreign situations.

MPC also revealed, “rent makes up 13 percent of importance in the consumer price. In order to secure the price, the rise of real estate cannot be ignored.” Houses and lease price increased by 2.6 percent in January, leading the rise of price in other products and services.

Meanwhile, governor Chun said, “the total volume of household loan is not so big but I am worried about insolvency of household economy since it has been growing 20 percent a year.”

Sang-Chul Kim sckim007@donga.com