The ceiling interest rate for deposits in dong with terms of one month up will be cut from 12 to 11 percent per year from May 28, under a State Bank of Vietnam 's May 25 decision.

The ceiling lending interest rate will be correlatively slashed from 15 to 14 percent per year on the same day, applied to four prioritised sectors including export, agriculture, rural areas and small- and medium-sized enterprises.

Interest rates used as management tools to be adjusted down include the refinancing rate from 13 to 12 percent, the discount rate from 11 to 10 percent, and the inter-bank electronic payment rate from 14 to 13 percent.

The State Bank said the interest rate reduction aims to help solve difficulties for production and business activities in accordance with the Government direction.

It said economic improvement, especially easing inflationary pressure, facilitated the move. The consumer price index ( CPI ) edged up only 0.18 percent in May and increased by 2.87 percent in the first five months of this year, which was in line with the target the National Assembly had set out for this year, it said.

Improved bank liquidity and a stabilising monetary market were other factors, it added.

The central bank noted that although interest rates have gradually declined, their slow progress together with rising credit risks still significantly challenge businesses in the face of falling purchasing power and increasing inventories.

Before the May 25 move, interest rates had been slashed three times this year.-VNA