Central bank cuts policy interest rates to spur growth

Caps on interest rates of dong-denominated deposits for terms between one month and less than six months will be lowered to 5.5% from 6%. (Photo: VNA)

The State Bank of Vietnam (SBV) announced it would reduce several policy interest rates from April 3, the second cut within one month, the regulator announced on its website March 31 night.

"In order to extricate the obstacles for the economy, businesses and citizens, the SBV decided a further cut on the policy rate," it said in a website statement.

Refinancing rate will be revised down to 5.5% from 6%, while the discount rate will remain unchanged at 3.5%.

The overnight electronic interbank rate will remain at 6.0%.

Caps on interest rates of dong-denominated deposits for terms between one month and less than six months will be lowered to 5.5% from 6% while the cap on the lending interest rates for short-term loans in some sectors will be reduced to 4.5% from 5%, it said.

The central bank said it decided to cut the rates “amid continued global economic uncertainties that led to the nation’s slowing economic growth in the first quarter while inflation is under control and banks have a surplus of liquidity,” according to the website statement.

The decision reflected an uncertain global outlook, with inflation in several countries high and Q1's economic growth lower than those of the same quarters in previous years, the SBV said, adding that domestic inflation was under control.

Vietnam’s economy reduced its speed to 3.32% growth in the first quarter from a 5.92% expansion in the fourth quarter of 2022.

Earlier this month, the SBV also cut several policy rates, its first policy easing since late 2020 after a series of interest rate increases./.

VNA