Vietnam central bank to keep flexible monetary policy in 2023, fight inflation

VIETNAM’S central bank said on Friday (Mar 31) it would keep its monetary policy flexible for the rest of 2023 to maintain macroeconomic stability and said it was important it keeps inflation under control amid external challenges.

Global tightening, especially by the US Federal Reserve, continues to affect Vietnam, a regional manufacturing powerhouse, as does the current global banking turmoil, said Dao Minh Tu, deputy governor of the State Bank of Vietnam.

“Our most important task is to keep inflation under control,” Tu told a news conference.

The central bank earlier said it would tightly control loans for risk-prone sectors and targets credit growth of 14 per cent to 15 per cent this year.

The SBV on Thursday said it intends to cut its policy rates further to support economic growth, which slowed to 3.32 per cent in the first quarter, against a 5.92 per cent expansion in the fourth quarter of 2022, as weak global demand dented exports.

Earlier this month, the central bank cut several policy rates to increase liquidity and support growth, in a surprise move that bucked the trend of regional peers amid global financial turmoil.

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Tu also said protecting the banking system was important and said some businesses had been struggling to get loans and needed support, including manufacturers suffering from a slump in orders.

“Ensuring the safety of the local banking system is very important now, especially after what has recently happened in the US banking system,” Tu said. REUTERS