Vietnam's Central Bank cuts policy rate for fourth time

The decision followed the government’s request to cut interest rates further this month to support businesses, in a bid to shore up a manufacturing-led economy suffering from weak global demand and slower credit growth.

As a result, the overnight lending interest rate in inter-bank electronic payment and lending to cover the shortfall in the capital clearing by the SBV for credit institutions decreased from 5.5%/year to 5%/year;

The refinancing interest rate was reduced from 5.0 %/year to 4.5 %/year. The rediscount interest rate decreased from 3.5 %/year to 3.0 %/year.

The interest rate for less than one-month deposits remains at 0.5 %/year. The interest rate applicable to deposits with a term from 1 month to less than 6 months is reduced from 5.0 %/year to 4.75 %/year. The interest rate for deposits in VND at the Fund people's credit and microfinance institutions was reduced from 5.5 %/year to 5.25 %/year.

Interest rates for deposits with a term of 6 months or more are set by credit institutions based on market capital supply and demand.

The State Bank of Vietnam has already cut rates three times this year, slashing both the refinance rate and discount rate by an accumulated 100 basis points (bps) each, to 5.0% and 3.5%, respectively. It last cut the refinancing rate by 50 bps on May 25.