"Uneasiness of Financial Market", a Freeze on Call Rate

The call rate of August will maintain the current level.

The Bank of Korea (BOK) forecasted that the Monetary Policy Committee(MPC) would freeze the call rate at the current level of 4.25% considering the uncertainty of the domestic financial market as the recovery of the US economy is delayed on August 6.

As the Korea Won decreased against the US dollar, a pressure of the price increase is not big. It was the important factor in the possibility of the call rate freezing.

In addition, not giving a signal which was sent in advance when the Bank of Korea (BOK) adjusts the interest, supports this forecast.

The increase rate of exports of July came close to 20% and the industrial production increased by 5.4%. An object economy is on the rise but the KOSPI is just in the level of 700 points. The market forecasts that the basis of low interest must be compulsory for the continuous economic growth owing to uneasy financial market.

A official of the Bank of Korea said “The default rate showed the lowest level and the capital conditions of the company are relatively good. Accordingly, there is a wait-and-see attitude on the domestic stock market owing to the uneasiness of the US financial market”

Sang-Chul Kim sckim007@donga.com