Policy Rates

The central bank would continue to keep the policy rates unchanged until the end of the year.

The timing and adjustment of policy rates must be decided based on the actual situation.

The inflation in 2020 is forecast at 3.3%, significantly lower than the target of 4% set by the government.

The decrease in short-term deposit rates at commercial banks was mainly driven by the excess liquidity when credit growth was slow at only 5.12% year-on-year as of September 22.

The average mobilizing interest rates as of the end of July declined by 0.6 percentage points per annum against late 2019, creating conditions for lower lending rates.

Cutting deposit interest rates on required reserve of commercial banks is not a further monetary easing.

Vietnam’s central bank is willing to increase the credit growth limits for banks from now until the end of the year to support economic growth.

Lower policy rates would enable commercial banks to cut interest rates in a more sustainable way, which in turn contribute significantly to economic recovery, said a central bank official.

The cut is applied to the refinancing interest rate, discount interest rate, and overnight lending rate.

The central bank had previously cut the benchmark interest rates by 0.5 – 1 percentage point in March.