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Vietnam finmin says 8-9 pct inflation not a worry
Vietnam's Finance Minister Vu Van Ninh said on Wednesday that inflation would become a concern only if it reached double digits this year.
Vietnam's official target for consumer price inflation this year is 7 percent, and Ninh said around that was appropriate for the level of growth the economy was achieving.
"If it is at 8 or 9 percent there is nothing to worry about," Ninh told reporters when asked about rising prices. "If it is into the double digits then it is a problem."
Consumer prices rose 9.46 percent in the year to March, the highest inflation rate in a year, after 8.46 percent in February. First quarter gross domestic product growth was estimated to be 5.83 percent, one of the fastest in the region.
Some economists, including from HSBC, London-based Capital Economics and the World Bank, have been expecting the central bank to raise the benchmark base rate in response to inflation, which is widely expected to float into the double digits in coming months.
But after a 100 basis point increase in December, the State Bank of Vietnam has kept the policy rate steady at 8 percent, while slowly tightening monetary policy through other means.
The government on Tuesday said it had instructed the central bank to keep the money supply growth target this year at around 20 percent to help control inflation, lowering it from a previous target of 28 percent.
Business executives, however, say banks' lending rates of 18-19 percent are still too high and on Tuesday the government told the central bank to instruct state-owned banks to cut rates "to the level accepted by the market."
In January Vietnam sold US$1 billion of 10-year dollar-denominated bonds abroad, with a price of 98.576 and a coupon of 6.75 percent. Vietnam declared its second foray into the international bond market a success.
Asked if Vietnam had plans for further overseas bond issues, Ninh said: "Not yet."
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