Vietnam central bank: difficult to cut interest rates at this time

VIETNAM’S central bank governor on Friday (Oct 28) said it would be difficult to cut interest rates at this time because inflation remains elevated.

The State Bank of Vietnam (SBV) has raised rates by a combined 200 basis points in recent weeks after September consumer prices showed a 4.01 per cent rise from the end of last year, close to the targeted 4.0 per cent for the year.

“The Fed has raised its rates faster than anticipated and more Fed rate hikes are expected,” Nguyen Thi Hong told Parliament, referring to the US central bank.

She added that the task at hand is to keep the banking sector stable and manage volatility in the dong currency, which has lost 8 per cent against the US dollar this year, tracking regional peers.

“The central bank has closely monitored the foreign exchange rate and allowed certain flexibility, along with other tools, to keep the foreign exchange market stable.”

Hong said this year’s GDP growth is forecast at 8 per cent while inflation will be kept below 4 per cent. REUTERS