Vietnam’s central bank cuts policy rates to boost growth

Saturday, 2017-07-08 04:30:44
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NDO - The State Bank of Vietnam (SBV) announced it would cut a number of policy interest rates by 0.25-0.5 percentage points from July 10 in a move to increase credit to the economy and stimulate growth.

Under the central bank’s decision, refinancing, rediscount and overnight electronic interbank lending rates will be cut by 0.25 percentage points.

The rate on loans to offset shortages in clearing between the central bank and commercial banks has also been cut by 0.25 points while the rate on short-term Vietnamese dong loans offered by credit institutions to some sectors has been slashed by 0.5 percentage points.

The SBV said that its move intended to support liquidity for credit institutions, stabilise interest rates and exchange rates, help curb inflation, maintain macroeconomic stability and boost growth of a reasonable level.

The central bank also ordered credit institutions to implement measures to reduce operating costs and improve performance so that they could lower lending rates to priority sectors and productive sectors.

In January, the SBV set a credit growth target of 18% for 2017 given credit increase by 18.71% in 2017.

The Vietnamese government is aiming for growth of 6.7% for this year but this target has proved to be a challenging task after the economy only expanded by a mere 5.73% in the first half of 2017.