Central bank highly valued for flexible monetary policy governance

Foreign exchange rates in a flexible manner appropriate to the domestic and foreign markets to stabilise the forex market. (Photo: baodautu.vn)

In the face of difficulties and challenges, the State Bank of Vietnam (SBV) has been proactively and flexibly governing the monetary policy, also coordinated with the fiscal policy and other macro-economic ones, to control inflation and help stabilise the macro-economy and boost growth, thus winning high evaluation from the international community.

Since the start of 2023, the world’s economic growth has remained slow while global production and trading activities have still faced numerous difficulties due to impacts of complex geopolitical developments and harsh weather. Central banks of many countries have continued tightening monetary policies and raised interest rates to curb inflation.

Meanwhile, under the National Assembly’s policy and the Government and Prime Minister’s directions on cutting lending interest rates to help tackle difficulties facing the economy, businesses, and people, the SBV has reduced regulatory interest rates for four straight times, by 0.5% - 2% per year, though interest rates keeps rising around the world.

The continuous reduction of the rates is assessed as a flexible solution appropriate to the current market situation as it has paved the way for lowering lending rates to boost credit access for businesses and people so as to aid economic growth.

The SBV has also worked with the Vietnam Banks Association to persuade member institutions to continue cutting lending rates, by at least 1.5% - 2% per year, for both existing and new loans.

So far, interest rates have been falling, with deposit and lending rates for Vietnamese dong transactions at commercial banks down over 1% - 2% per year compared to the end of 2022. They are expected to decrease further in the time ahead.

Meanwhile, the SBV has pressed on with governing foreign exchange rates in a flexible manner appropriate to the domestic and foreign markets to stabilise the forex market.

During a working visit to Vietnam on October 3, 2022, the US Department of the Treasury highly valued the SBV’s governance of the monetary policy and exchange rates amid numerous difficulties and challenges facing the global economy. Therefore, in its report released in November last year, the US department removed Vietnam from the monetary manipulation monitoring list

In August this year, Global Finance Magazine unveiled the 2023 Central Banker Report Cards, naming the central bank governors who earned A+, A, or A- grades.

Grades are based on a scale from A to F for success in inflation control, economic growth goals, currency stability, and interest rate management. An “A” represents an excellent performance down through an “F” for outright failure.

SBV Governor Nguyen Thi Hong was among the three graded “A+”, showing the SBV’s governance of the monetary policy has been recognised and highly valued by the international community./.