SEOUL, Oct 5 Reuters South Korea39;s central bank governor said there was a high possibility interest rates would stay higher for longer and there was a need to improve the system to better supply liquidity in case of unexpected financial instability.

Bank of Korea BOK Governor Rhee Changyong made the remarks at a policy forum on financial stability on Thursday.

On its monetary policy tool for supplying liquidity to banks, the central bank will seek more improvements such as accepting loan receivables as eligible collateral and widening support to nonbank financial institutions, Rhee said.

In July, the BOK made changes to its standing lending facility to boost liquidity. It lowered lending rates for the loans taken out from the facility and accepted additional kinds of bonds for collateral, in a move to strengthen its role as a liquidity backstop.

South Korea39;s consumer inflation accelerated for a second month in September and above market expectations, data showed on Thursday, supporting prospects of the central bank maintaining its restrictive policy for some time.

Reporting by Jihoon Lee; Editing by Jacqueline Wong

Source Reuters