Vietnam Monetary Policy


SBV cuts rates further to boost economic activity

On 21 December, the State Bank of Vietnam (SBV) reduced its key refinancing rate by one percentage point to 9.0%. In addition, the SBV cut the discount rate to 7.0% from 8.0%. The decision represented the sixth time the SBV cut interest rates in 2012 - following a series of five rate cuts in the first half of the year. Moreover, the Bank cut the rate cap on short-term dong deposits to 8.0% from 9.0% and reduced to 12.0% the short-term lending rate for some sectors of economic activity, including agriculture, export and hi-tech industries as well as small and medium-sized companies.

Monetary authorities are easing their stance in an effort to support growth, as the Vietnamese economy grew 5.0% in 2012, the slowest expansion seen in the 13 years. The SBV benefited from moderating inflation over the course of 2012, which gave monetary authorities ample manoeuvring room. However, recent trends point to resurfacing price pressures, with inflation ending the year at 6.8%, after having fallen to an almost three-year 5.0% low in August.


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Vietnam Monetary Policy Chart

Vietnam Monetary Policy January 2013

Note: Refinancing Rate, in %.
Source: State Bank of Vietnam (SBV).

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