TIME TO CUT INTEREST RATES
VGP – The State Bank of Việt Nam has announced to cut interest rates by one percentage point, reflecting the Government’s confidence in combating inflation and desire to ease difficulties against banking sector and businesses.
Accordingly, the refinancing rate will be lowered from 15% to 14%, while the cap on deposit interest will be cut from 14% to 13%.
The overnight loan and discounting interest rates stand at 15% and 12%, respectively, 1% lower than before.
It is the right time to reduce interest rate in order to meet the needs of economic growth while also achieving the Government’s target of single-digit inflation for this year, said SBV Governor Nguyễn Văn Bình at a recent press conference.
Governor Bình said since August last year, inflation began a downward trend but it was not enough to lower interest rates because of the banks’ liquidity problem caused by hot credit growth.
However, experts have warned that if Việt Nam hurries to loosen the monetary policies, it would suffer another inflation cycle.
In 2012, the banking sector continues prioritizing capital for four areas, namely agriculture and rural development, exports, supporting industries, and small and medium-sized enterprises, he said, adding that banks are also in favored of these areas.