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State Bank holds rate steady amid tight policy
The State Bank of Vietnam on August 29 decided to keep the prime interest rate unchanged at 14 percent per year, continuing the Government’s tight monetary policy.
The interbank and common market lending interest rate in September is capped at 21 percent annually. Businesses have welcomed the rate news and recent speculation about the prime rate policy of the central bank has now ceased.
Over the past few days, as economic indicators revealed positive signals, the prime interest rate expectedly fell 0.5 percent alongside cooling inflation and a reduced trade deficit, two primary areas of Government concern.
The General Statistics Office reported that the trade deficit stood at US$900 million in August, the second consecutive month the country kept the figure under US$1 billion.
Exports reached US$6.1 billion, bringing export turnover in the first eight months of the year to US$43.3 billion, up 39.1 percent year-on-year.
The consumer price index in August rose by 1.56 percent against July, bringing year-on-year inflation in the past eight months to 28.32 percent.
The Government’s efforts to stabilise the economy include sustaining growth, controlling inflation, increasing the attractiveness of VND-denominated deposits, and improving the balance of payments, have begun to show signs of success, said Paul Gruenwald, head of economics and research, Asia, Australia and New Zealand Banking Group Ltd.
While insisting on a tight monetary policy and an unchanged prime rate of 14 percent per annum, the State Bank of Vietnam on August 29 also tripled deposit interest rates for compulsory reserves of credit institutions to 3.6 percent from 1.2 percent per year.
This aims to encourage credit institutions to reduce their lending interest rates to help boost businesses and borrowers’ investment in production.
Both decisions will take effects as from September 1.
VOV
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