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SBV raises OMO interest rate to 15%
Vietnam's central bank raised the interest rate it charges in open market operations on Tuesday, its second hike in two weeks in the face of some of the world's highest inflation.
The State Bank of Vietnam (SBV) increased the reverse repurchase rate by 100 basis points to 15 percent, an official in the banking operations centre said. Bankers confirmed the move.
The rate has been lifted 800 basis points since early November in the face of rising inflation, and as the country's monetary authorities rearrange the policy rate regime.
"I support this decision because it sends a message that the SBV is continuing to tighten monetary policy, despite facing many complaints from companies," said economist Vo Tri Thanh, of the Central Institute for Economic Management, a government think-tank.
Other key rates were left unchanged, including the refinance rate and the discount rate, which were increased 100 basis points at the end of April to 14 percent and 13 percent respectively, the State Bank of Vietnam's website indicated.
Consumer price inflation in Vietnam has skyrocketed since late last year, propelled largely by high domestic credit growth but also rising food, fuel and electricity prices.
In April, the consumer price index was up 17.51 percent from the same month last year - the highest level since December 2008 - while the index leapt 3.32 percent from March.
The government's General Statistics Office is expected to release May's inflation data next week, and a deputy director of the office was quoted on May 7 as saying the month-on-month rise would be 2-2.5 percent. [ID:nL3E7G700U]
Economists say annual inflation is likely to keep rising before easing in the third quarter.
Lending rates in Vietnam remain several percentage points above policy rates, ranging as high as 20 percent.
reuters
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