Vietnam central bank cuts interest rates the third time to back virus-hit firms

The State Bank of Vietnam announced to cut deposit interest rates for organizations, individuals, and foreign bank’s branches as well as lending interest rates of credit institutions for some economic sectors.

Accordingly, the maximum annual deposit interest rate for below one-month term will be reduced to 0.2%. Annual interest rate for one-month term to below six-month term will be cut to 4% from 4.25%.

Lending interest rate for microfinance institutions between one month and below six months will be lowered to 5.5% from 6% per year.

Meanwhile, maximum short-term lending interest rate for capital to be injected in agriculture, rural areas, exports, supporting industries, small and medium-sized enterprises, and high-tech enterprises will be reduced to 6% from 6.5%.

The refinancing rate will be reduced to 4% from 4.5% per year and the rediscount interest rate to 2.5% from 3% a year.

This has been the third time, the State Bank of Vietnam announced to cut operation interest rates. In August, the regulator decided to cut 20 – 50 basis points for the dong-dominated compulsory reserve interest rate and non-compulsory deposits.

The central bank said it has synchronously operated monetary policy tools to control inflation, stabilize the macro-economy, the money market and reduce the market interest rate level, support support to restore economic growth amid crisis.

Economic growth in the first 9 months of 2020 was reported at 2.12%, while inflation was controlled with an average of 3.85% in 9 months.

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