Vietnam considers further key interest rates cut to back virus-hit economy
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On March 15, Vietnam’s central bank cut its refinance rate to 5% from 6%. Photo: SBV
Beside slashing the refinancing rate, discount rate, open market interest rate, the regulator will direct credit institutions to further sacrifice profit, reduce costs for a stronger lending rates cut in the coming time.
The central bank interest rate cut plan aims to support Prime Minister Nguyen Xuan Phuc’s 2020 new GDP target at 5% and inflation under 4%.
At the large-scaled online meeting with local governments, businesses, the Vietnam central bank’s governor requested credit institutions to simplify lending procedures to support enterprises. The regulator will set up a working group visiting localities, key economic areas to help solving problems lenders are facing.
On March 16, joining a wave of cutting interest rates in the world and across Asia to support economic growth amid the deadly virus outbreak, Vietnam’s central bank cut its refinance rate to 5% from 6%.
The regulator also lowered its discount rate to 3.5% from 4%, and reduced the repurchase rate, known as the open-market operations rate, by the same magnitude. The overnight lending rate in the inter-bank market is reduced to 6% vs 7%.
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State Bank of Vietnam's Governor Le Minh Hung seen at the online meeting. Photo: Vietnam News Agency |
Beside the interest rates, the central bank plan to run monetary policy for stabilizing the macro economy, exchange rate to create favorable conditions for economic recovery after the pandemic. The bank is ready to intervene in foreign currency market and provide sufficient capital for the economy, Hung said.
"The banking sector has been very proactively and flexibly in removing difficulties for customers and achieving important initial results," the central bank governor praised.
As of May 8, 2020, the banking system has restructured the repayment term for over 215,000 customers with the outstanding loans of VND130 trillion ($5.6 billion). The local lenders exempted, reduced interest rates for 260,000 customers with an outstanding loan of over VND1,000 trillion ($42.7 billion).
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