Vietnam lowers key interest rates to buffer COVID-19 pandemic impact

The central bank reduced the benchmark refinance rate to 4.5% from 5% and the discount rate to 3% from 3.5%, the regulator said in a statement released on May 12.

The overnight lending rate in the inter-bank market was lowered to 5.5% from 6% and the open-market-operation (OMO) rate to 3% from 3.5%.

Vietnam’s central bank also reduced the caps on the interest rate of Vietnamese Dong-denominated deposits and loans.

The maximum interest rate for deposits with less than one-month term reduces to 0.2% from 0.5%.

The regulator also cut its interest-rate cap for dong deposits with maturities of one month to less than 6 months to 4.25% from 4.75%, while ordering banks to lower the maximum dong lending interest rate for short-term loans to 5% from 5.5%.

In less than two months, the Vietnamese government cut the policy interest rate twice

On March 17, Vietnam 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 latest decision was made after the meeting between Prime Minister Nguyen Xuan Phuc and the business community weekend when Central Bank Governor Le Minh Hung announced a further interest cut to support virus-hit firms.

► Vietnam considers further key interest rates cut to back virus-hit economy