Vietnam Monetary Policy


SBV cuts rates for second time in a month

At its meeting on 10 April, the State Bank of Vietnam (SBV) reduced its key refinancing rate by one percentage point to 13% from 14%. In addition, the SBV cut the discount rate to 11% from 12%. The move represents the second time in a month in which the SBV cuts interest rates, following the decision on 12 March, when the Bank cut both the refinancing and the discount rate for the first time since February 2009. The current decision was caused by a more favourable inflation scenario. While Vietnam still boasts the highest inflation in the region, prices have fallen sharply from an almost three-year high 23.0% recorded in August 2011 to the current 12.2%. Currently, Vietnamese monetary authorities' main priority is to rekindle economic growth, as economic activity is showing signs of weakness. Monetary authorities did not provide detailed comment on the rate decision. SBV Governor Nguyen Van Binh announced in March that the Bank could cut interest rates by one percentage point every quarter this year if the inflation trajectory continued to point downwards.

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