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Easing interest rates – how much, when?
The government and economists both think that now is the right time to think of easing the interest rates. However, it remains unclear how sharply to reduce and when to cut down interest rates.
The State Bank of Vietnam has rejected the rumors that it has not made any decision relating to the ease of the deposit ceiling interest rate, saying that the interest rate reduction will not happen at this moment. However, responding to the central bank’s statement, people just say “there is no smoke without fire”.
People have every reason to believe in the rumor about the interest rate reduction. Governor of the State Bank of Vietnam Nguyen Van Binh stated that once the inflation rate keeps at below one percent, this is the right time for considering easing the interest rates.
The inflation rate once hit its record high in August, while it has been staying at less than one percent since September. Especially, in October and November, the inflation rate did not exceed 0.5 percent. Experts have also continuously urged to take actions to ease interest rates in order to help revive the local production, which has been stagnant due to overly high interest rates.
People have more reasons to believe that the interest rate reductions would come in the near future after the press release organized by the government’s office, which took place after the government’s regular meeting in late November 2011.
As such, easing interest rates is inevitable, only it still not clear when and how.
How much?
The National Finance Supervision Council and the National Advisory Council for Monetary Policies once discussed the plans to ease interest rates, step by step, from the current 14 percent to 13 or 12 percent, or 11 or 10 percent.
The Vietnam Association of Financial Investors VAFI on September 2011 suggested that it is necessary to slash the interest rate to 10 percent right in 2011.
However, 10 percent proves to be an unreasonable level if noting that the inflation just began decreasing in September, while the consumer price index CPI tends to increase slightly in December. Therefore, the interest rates of 11-13 percent would be more reasonable.
BIDV, a big bank in Vietnam, has made a move that caught the attention from the public that in early December 2011; it slashed the lending interest rate applied to some subjects by 2 percent. Three months ago, BIDV was the first bank which announced the cutting of lending interest rates to 17-19 percent. Especially, it has resumed the lending to the factors which are considered “too sensitive and risky” such as securities and real estate sectors.
The two percent interest rate reduction in early December has made people think that two percent is a lucky number because it is an even number.
For that many reasons, the interest rate reduction to 12 percent proves to be the priority solution.
When?
People are expecting the government’s resolution which will come out in some more days. The government, after considering the socio-economic development plans set up by the National Assembly will release a resolution about what it will have to do to fulfill the tasks.
As such, the decision about the interest rate reductions would be made several days after the government’s resolution is published. Regarding the time of promulgating the resolution, experts say that in general, the resolution would come out on the 10th of the month.
This means that on December 7-15, people may hear the official decisions about the changes which will have big impacts on the national economy in 2012.
Truong Son
vietnamnet
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