According to the central bank, reducing the interest rates is a flexible solution in line with current market conditions to realise the National Assembly and Government's goal on economic recovery. (Photo: VNA) Hanoi (VNA) – The State Bank of Vietnam (SBV) onMarch 14 issued two decisions to reduce regulatory interest rates by 0.5% to1%, which will come into force on March 15.
Under Decision No. 313/QD-NHNN, therediscount interest rate will be revised down from 4.5% per year to 3.5% per year; overnightlending rates in interbank electronic payments and loans to cover capitalshortfalls in clearing payments of the SBV for credit institutions will be decreased from 7% per year to 6% per year. Particularly, the refundinginterest rate will remain unchanged at 6% per year.
The SBV’s Decision No. 314/QD-NHNN adjusts the maximumshort-term lending interest rate in the Vietnamese dong of credit institutions for borrowers tomeet capital needs for economic sectors and industries in Circular No.39/2016/TT-NHNN dated December 30, 2016.
Accordingly, the maximum short-term lending interest rate in the Vietnamese dong of credit institutions for borrowers to meet capital needs for severaleconomic sectors and industries will be reduced from 5.5% per year to 5% peryear.
The maximum short-term lending interest rate in the Vietnamese dong of people's credit funds and microfinance institutions will be decreased from 6.5%per year to 6% per year.
According to the central bank, reducing the interest rates is aflexible solution in line with current market conditions to realise theNational Assembly and Government's goal on economic recovery as it helps reducethe market interest rates, contributing to removing difficulties for businessesand the economy.
The adjustment of the ceiling on short-term lending interestrates in the Vietnamese dong for priority sectors to 5% per year creates better conditionsfor businesses and people to access loans at a lower cost.
However, the SBV is still cautious with thepossibility of increasing inflation pressure as in the first two months of thisyear, Vietnam’s inflation rate has increased close to the target level of 4.5%while global inflation is forecasted to remain at a high level.
Central banks around the world have kept tightening their monetary policies, increasing and keeping interest rates at a high level,especially when the US Federal Reserve (Fed) will take moves after its next meeting slated on March21-22 to respond to the impacts of the bankruptcy of Silicon Valley Bank (SVB)in the US.
Amid global and domestic economic uncertainties, theSBV will keep a close watch on developments of the domestic and foreign markets to continueadjusting regulatory interest rates
In February 2023, commercial banks in Vietnam continuedto agree to reduce deposit interest rates to reduce lending interest rates,which expectedly supports businesses and the economy.
Accordingly, commercial banks have reduced deposit interestrates from 0.2-0.5% per year for a term of 6-12 months. Currently, theinterest rate of newly arising deposits from commercial banks is about 6.7% peryear and the interest rate of newly arising lending from commercial banks isabout 9.4% per year.
Previously, in 2022, the SBV increased the regulatoryinterest rate by 1% on September 23 and October 25 as the US Federal Reservecontinuously raised interest rates to curb inflation./.
