Vietnam's central bank signals more rate cuts to bolster economic growth

The State Bank of Vietnam's headquarters in Hanoi. - VNA/VNS

HANOI (Xinhua): The State Bank of Vietnam would likely to cut its policy rates further to support economic growth which grew 3.32 per cent in the first quarter this year, the second slowest rate of quarter expansion since 2011, local newspaper Vietnam News reported on Friday (March 31).

The central bank mulls another round of rate cuts which is expected to encourage local banks to lower lending rates and offer more loans to businesses, Deputy Governor of the State Bank of Vietnam Dao Minh Tu said on Thursday, affirming abundant liquidity in the banking system.

Earlier this month, the central bank, in an unexpected move, cut the discount rate to 3.5 per cent and the overnight lending rate in the inter-bank market to 6 percent while lowering the cap on interest rates for short-term loans in export-oriented sectors to 5 per cent.

However, in the latest move the central bank left the refinancing rate unchanged at 6 percent, indicating that the policy stance of striking a balance between growth and inflation remains unchanged, according to experts from Singapore-based United Overseas Bank.

Last year, Vietnam's central bank raised its key policy rates by 100 basis points on Sept. 22 followed by another round of 100 basis points a month later, in response to U.S. interest rate hikes, global inflation pressure and a weakening domestic currency.

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