Vietnam central bank weighing more rate cuts: governor

VIETNAM’S central bank is weighing further policy rate cuts to support the country’s slowing economy, its governor said on Friday (May 12).

“The State Bank of Vietnam will continue to closely monitor the economic situation, and will cut its policy rates in case of favourable conditions,” Nguyen Thi Hong said in a statement.

Vietnam is trying to avert a slowdown in growth from weak demand in its key markets, after first quarter gross domestic product expansion slowed to 3.3 per cent, from 5.9 per cent in the fourth quarter last year.

“We also call on commercial banks to continue to cut their operating cost so that they can lower their lending interest rates to ease the burden for businesses,” Hong said.

Vietnam will stick to a credit growth target of 14 per cent-15 per cent this year, she said, adding that the central bank will continue with its plan to restructure loans for struggling businesses.

Its lawmakers earlier this week urged the central bank to consider cutting policy rates further to shore up the economy, following its cuts in March and April.

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“The State Bank of Vietnam and the banking system want to do a lot to lift difficulties for business and production activities,” Hong said separately at a conference on Thursday, adding that the US Federal Reserve had slowed down its rate hikes and liquidity in Vietnam’s banking system had improved.

The central bank last cut its refinance rate to 5.5 per cent from 6.0 per cent on Apr 3, and its discount rate to 3.5 per cent from 4.5 per cent on Mar 15.

The refinance rate, however, remains higher than the level seen before October last year, while the discount rate is higher than before September 2022. REUTERS