Establishing a trend of decreasing interest rates for the market

VCN - The State Bank of Vietnam (SBV) has decided to further reduce some operating interest rates for the fourth time this year since June 19. This move is considered by experts to be strong and appropriate in the current context.
Reasonable interest rates - leverage to recover the economy Reasonable interest rates - leverage to recover the economy
Deputy Governor of SBV: Interest rates are falling Deputy Governor of SBV: Interest rates are falling
Interest rates cut expected to attract borrowers Interest rates cut expected to attract borrowers

Abundant and redundant liquidity

Previously, on June 15, 2023, the US Federal Reserve (FED) announced to keep the interest rate unchanged at 5-5.25%/year but signaled that it could continue to tighten this year. The market forecasts the possibility that the Fed will increase one to two times interest rates in 2023.

In the first months of the year, many economic indicators increased lower than the same period of the year, reflecting the negative impact of the sharp decline in foreign demand and the internal difficulties of the economy. However, inflation continued to slow in the first five months of 2023 due to low economic growth, reducing demand-pull inflation pressure.

The State Bank said many forecasts indicate that it is quite feasible to achieve the average inflation target for the whole year of about 4.5%; International organizations forecast average inflation in 2023 at about 3%-5.5%.

Also according to the money management agency, the money market is stable, the liquidity of the credit institution system is abundant. Since the beginning of 2023, the State Bank has purchased a large amount of foreign currency to supplement foreign exchange reserves, contributing to the circulation of a large amount of VND. The above solutions have contributed to creating abundant liquidity in the market, thereby stabilizing and reducing the interest rate in the interbank market, supporting credit institutions to reduce deposit interest rates and reduce lending rates for the economy.

Operating interest rates continue to decrease, which is expected to support businesses' recovery. Photo: Internet
Operating interest rates continue to decrease, which is expected to support businesses' recovery. Photo: Internet

Therefore, the State Bank has adjusted the operating interest rates four times with a total reduction of 0.5-2.0%/year.

According to the State Bank of Vietnam, continuing to reduce the operating interest rates is a flexible solution, suitable to the current market conditions to realize the goal of reducing lending rates to support the process of recovering economic growth according to the policy of the National Assembly and the direction of the Government and the Prime Minister.

“The continued reduction in operating interest rates by the State Bank of Vietnam confirms and establishes a trend of interest rate reduction for the market, thereby orienting credit institutions to be bolder and more drastic in reducing lending rates and accompanying them together with businesses and people, contributing to promoting economic growth and recovery", the State Bank's report stated.

It needs to improve the effectiveness of policy coordination

Commenting on this move of the State Bank, economic expert Dr. Can Van Luc and a group of experts from the BIDV Training and Research Institute said that this continues to be a strong move, suitable for the four institutions.

Firstly, the pressure to increase interest rates and exchange rates has been significantly reduced when the FED has paused to raise interest rates, it may increase, but the total amount of increase is forecast to be only at a level. Secondly, although inflation is high, it has been decreasing since February 2023. Third, the domestic money market is basically stable, the liquidity of the banking system is more abundant, and credit demand is weak. Fourth, the socio-economic situation has many difficulties, so reducing interest rates is one of the solutions to support businesses and people to overcome difficulties and promote growth.

Therefore, according to these experts, the reduction of operating interest rates will support credit institutions in accessing capital from the SBV through tools such as rediscounting, refinancing, and interbank lending; helping credit institutions continue to reduce deposit and lending interest rates. At the same time, credit growth is expected to be more prosperous when interest rates decrease, thereby contributing to increasing income from credit and related services for credit institutions.

Moreover, reducing interest rates will help businesses mobilize new capital at lower interest rates, both contributing to increasing debt repayment capacity, reducing bad debt risks, reducing input costs, and creating favorable conditions for reducing output prices in the future. response, thereby stimulating consumption.

Dr. Can Van Luc said that changing monetary policy, from cautious to flexible, loosening will help businesses and people expect interest rates to continue to decrease, making them able to decide to invest and spend more money, contributing to supporting socio-economic recovery and development next year.

In particular, reducing interest rates will have a positive impact on the stock and real estate markets, as investors can partially shift from saving to investment with the desire to seek higher returns.

Despite many impacts, the SBV still affirmed that it would not be subjective with inflation pressure. It will continue to closely monitor domestic and international developments, inflation forecast and market interest rates to continue to monitor credit institutions to have cost-saving solutions to reduce lending interest rates.

Sharing the same opinion, but to be more effective, experts of the BIDV Training and Research Institute suggested that it is necessary to improve the effectiveness of policy coordination, especially between monetary policy, fiscal policy, price and other policies. Other macro policies aimed at proactively controlling inflation and stabilizing the macro-economy. Along with that, it is necessary to accelerate the restructuring of weak credit institutions and be more drastic in improving the business and investment environment.

By Huongdiu/Quynhlan

Related News

Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Ensuring national public debt safety in 2024

Ensuring national public debt safety in 2024

VCN - Since the beginning of the year, public debt management has been conducted proactively and effectively, meeting the need of raising capital for development investment. At the same time, debt indicators by the end of 2024 are guaranteed within the ceiling and safety threshold approved by the National Assembly, ensuring national financial security, increasing proactive response to risks arising from external and internal causes of the economy.
Difficulty in finding banks eligible to receive compulsory transfers

Difficulty in finding banks eligible to receive compulsory transfers

VCN - Reporting to the National Assembly, the State Bank of Vietnam (SBV) said that one of the difficulties in restructuring the credit institution system is the long process of finding and negotiating banks eligible to receive compulsory transfers.
How does the Fed

How does the Fed's interest rate cut affect Vietnam?

VCN - In the latest meeting of the Federal Open Market Committee (FOMC), the Fed decided to cut interest rates by 50 basis points to a range of 4.75%-5%. Analysts have given different perspectives on this decision.

Latest News

Import and export are expected to reach 800 billion USD

Import and export are expected to reach 800 billion USD

VCN - Although the import and export turnover of goods slowed down in September 2024, in general, import and export activities, especially exports, still grew positively in the first 9 months of 2024. It is expected that import and export of goods in 2024 will reach a record of 800 billion USD.
Fresh coconuts quenching new overseas markets

Fresh coconuts quenching new overseas markets

Vietnam’s fresh coconuts are being increasingly consumed in international markets such as the US, China, and the UK, highlighting a bright spot in Vietnam's fruit export sector with many opportunities for breakthroughs in the near future.
Rice exports likely to set new record in 2024

Rice exports likely to set new record in 2024

Vietnam sold 800,000 tonnes of rice overseas for 505 million USD in October, bringing the country's total export volume and value in the first ten months to nearly 7.8 million tonnes and 4.86 billion USD, up 10.2% and 23.4% year-on-year, respectively.
Vietnamese goods conquer halal market through trust and quality

Vietnamese goods conquer halal market through trust and quality

VCN - According to the Ministry of Agriculture and Rural Development, Vietnam's capacity to export over 50 billion USD worth of agricultural products annually, coupled with established supply chains, provides a significant advantage for Vietnamese agricultural and aquatic products to penetrate the Halal market.

More News

Exporters urged to have strategies to take advantage of UKVFTA for expansion

Exporters urged to have strategies to take advantage of UKVFTA for expansion

The UK is concerned by sustainable development, labour issues, environmental protection and social responsibility. Therefore, when exporting to the UK, enterprises should not just be concerned about being competitive in terms of price and quality.
Fresh coconuts quenching new overseas markets

Fresh coconuts quenching new overseas markets

Vietnam’s fresh coconuts are being increasingly consumed in international markets such as the US, China, and the UK, highlighting a bright spot in Vietnam's fruit export sector with many opportunities for breakthroughs in the near future.
Vietnam and UAE trade sees billion-dollar growth

Vietnam and UAE trade sees billion-dollar growth

VCN - According to General Department of Vietnam Customs by the end of September 2024, bilateral trade between Vietnam and the United Arab Emirates (UAE) reached nearly US$5 billion, an increase of more than US$1.4 billion over the same period last year.
Sharing responsibility for ensuring security and safety of the supply chain

Sharing responsibility for ensuring security and safety of the supply chain

VCN – Post - clearance audit is carried out in a planned, focused and key manner, avoiding widespread and ineffective inspections, thereby creating convenience for the business community and improving the effectiveness of state management of customs.
Many factors affecting tuna exports in the last months of the year

Many factors affecting tuna exports in the last months of the year

VCN - Tensions between Israel and Iran escalate, tuna businesses are worried, they may have to stop export orders to the Israeli market in the last months of the year.
Vietnam still dominates Philippine rice import

Vietnam still dominates Philippine rice import

Vietnam continues to assert its dominance as the top rice exporter to the Philippines, with 2.91 million tonnes shipped as of the late October, or over 79% of the Philippines' total rice imports, according to the Vietnam Trade Office in the Philippines.
Vietnam cements ties with partners to engage in global semiconductor, AI industries

Vietnam cements ties with partners to engage in global semiconductor, AI industries

By boosting cooperation with reputable partners across the globe, Vietnam is taking steps to gain a foothold in the world’s semiconductor and artificial intelligence (AI) industries.
Aquatic exports expected to rise in year-end despite challenges

Aquatic exports expected to rise in year-end despite challenges

Aquatic exports is expected to surge in the remaining months of this year, as the year-end festive season comes, despite many challenges in the international markets, according to insiders.
Trade Defense: The Key to Success for Vietnamese Businesses

Trade Defense: The Key to Success for Vietnamese Businesses

VCN - From losses and near bankruptcy, many domestic enterprises have recovered thanks to timely application of trade defense measures. Trade defense is also an effective shield for Vietnamese enterprises against a series of lawsuits from importing countries, thereby maintaining advantages and developing on "away grounds".
Read More

Your care

Latest Most read
Import and export are expected to reach 800 billion USD

Import and export are expected to reach 800 billion USD

VCN - At the regular Government meeting in September 2024, Minister of Industry and Trade Nguyen Hong Dien assessed: import and export continued to be a bright spot, recording a positive recovery compared to the same period last year.
Fresh coconuts quenching new overseas markets

Fresh coconuts quenching new overseas markets

Vietnam’s fresh coconuts are being increasingly consumed in international markets such as the US, China, and the UK, highlighting a bright spot in Vietnam's fruit export sector with many opportunities for breakthroughs in the near future.
Rice exports likely to set new record in 2024

Rice exports likely to set new record in 2024

Vietnam sold 800,000 tonnes of rice overseas for 505 million USD in October, bringing the country's total export volume and value in the first ten months to nearly 7.8 million tonnes and 4.86 billion USD, up 10.2% and 23.4% year-on-year, respectively.
Vietnamese goods conquer halal market through trust and quality

Vietnamese goods conquer halal market through trust and quality

According to the Ministry of Agriculture and Rural Development, Vietnamese agricultural and aquatic products could penetrate the Halal market.
Exporters urged to have strategies to take advantage of UKVFTA for expansion

Exporters urged to have strategies to take advantage of UKVFTA for expansion

The UK is concerned by sustainable development, labour issues, environmental protection and social responsibility. Therefore, when exporting to the UK, enterprises should not just be concerned about being competitive in terms of price and quality.
Mobile Version