Vietnam's central bank makes 1st rate cut since 2020 to support growth

17 Mar '23

2 min read

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The State Bank of Vietnam (SBV) recently made its first policy interest rate cut since October 2020 to stabilise the monetary market and back economic growth. The central bank adjusted down several policy rates by 50-100 basis points this week.

The rediscount interest rate has been accordingly reduced from 4.5 per cent per year to 3.5 per cent per year while overnight electronic interbank rate and interest rate for loans to offset capital shortages in clearance between the central bank and commercial banks have been also reduced from 7 per cent per year to 6 per cent per year.

The maximum short-term interest rate of Vietnamese dong-denominated loans have been adjusted down from 5.5 per cent to 5 per cent per year to meet capital needs of the government’s priority industries.

The same of dong-denominated loans of people's credit funds and microfinance institutions has also been decreased from 6.5 per cent to 6 per cent per year, a Vietnamese media outlet reported.

SBV feels the country’s inflation is under control and data from the general statistics office (GSO) showed the consumer price index (CPI) last month increased by 0.45 per cent against the previous month. For the first two months of 2023, the CPI increased by 4.6 per cent against the same period last year.

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