Central bank slashes benchmark rates in favor of economic recovery
VGP – The State Bank of Viet Nam has decided to cut the benchmark interest rate for the third time this year in an effort to back the national economy amid difficulties posed by the COVID-19 pandemic.
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Accordingly, from October 1, the refinancing interest rate is cut to 4% per annum from 4.5%, while the rediscount interest rate drops to 2.5% from 3%.
The overnight electronic interbank rate and rate of loans to offset capital shortage in clearance between the SBV and credit institutions dip to 5% per annum from 5.5%.
The central bank also decided to cut the interest rate of bids of valuable papers through open market operations from 3% per annum to 2.5%.
Regarding the maximum interest rate for deposits in Viet Nam dong (VND) by organizations and individuals at credit institutions and foreign bank branches, the maximum interest rate applicable to demand deposits and those of less than one month is 0.2% per annum.
The maximum interest rate applicable to deposits with terms from one month to less than six months declines to 4% per annum from 4.25%.
The maximum rate for deposits with terms of one month to less than six months at people’s credit funds and microfinance institutions will be cut to 4.5% per annum from 4.75%. Interest rates on deposits with a term of six months or more are determined by credit institutions on the basis of market capital supply and demand.
Loans to borrowers in a number of regulated fields and economic sectors have been cut to 4.5% per annum from 5%. The maximum short-term lending interest rate in VND at people’s credit funds and microfinance organizations for these capital needs is now down from 6% per annum to 5.5%.
The central bank reported that since early this year it has synchronously operated monetary policy tools to control inflation, stabilize the macro-economy and the monetary market, and reduce the market interest rate to support economic recovery to overcome COVID-19 negative impacts.
Earlier, the SBV cut benchmark interest rate twice with a total reduction of 1-1.5% per annum in a bid to facilitate credit institutions to access low cost funding./.
By Kim Loan
