Prudent monetary policy helps control inflation in Q1 hinh anh 1Consumers shop at the Big C market in Hue city (Photo: VNA)

Hanoi (VNA) – The State Bank of Vietnam (SBV)’s continuation of a prudent monetary policy is a reason for the slight year-on-year decrease of the core inflation in the first quarter of 2017.

The assessment was made by Director of the Vietnam Institute for Economic and Policy Research (VEPR) Nguyen Duc Thanh at a meeting in Hanoi on April 10 to release a report on Vietnam’s macro-economy in Q1.

The VEPR research team cited the SBV as saying that money supply in the first three months of 2017 increased 3.52 percent from the end of 2016, slightly lower than that in the same period last year.

The first quarter posted the fastest credit growth rate in many years, 4 percent compared to the end of 2016, indicating businesses’ stronger absorption of capital.

However, the modest rise in the mobilised capital led to a gap between capital mobilisation and lending which might be the cause of the recent slight disturbance in inter-bank interest rates.

VEPR researchers said although the pressure on inflation showed signs of easing in Q1, it remains big, especially when the economic growth between January and March (5.1 percent) is much lower than the 6.7-percent target for the whole year set by the National Assembly.

It is hard to control inflation at below 4 percent in the next months since the domestic consumption demand and global prices of basic commodities will rebound while prices of public services will be adjusted as scheduled, they said.

Expert Truong Dinh Tuyen said if the US’s Federal Reserve continues to hike interest rates, the US dollar will get stronger, putting more pressure on the VND/USD exchange rate and inflation.-VNA