Vietnam cuts interest rates again to spur growth

By Reuters June 15, 2023 | 10:46 pm PT

The headquarters of State Bank of Vietnam in Hanoi. Photo by Shutterstock/thi

Vietnam’s central bank said on Friday it was cutting its key interest rates by 50 basis points, its fourth policy rates adjustment this year, to support slowing economic growth amid global uncertainties.

The refinance rate was cut to 4.5%, the discount rate to 3.0% and the electronic interbank rate to 5.0%, the State Bank of Vietnam (SBV) said in a statement. The change is effective from Monday.

The move is a bid to shore up Vietnam’s manufacturing-led economy at a time of weak global demand and slower credit growth. Earlier on Friday, the government urged the central bank to "immediately take practical measures to lower interest rates level, with a round of policy rate cuts this month."

Vietnam’s economic growth slipped to 3.3% in the first quarter from 5.9% in the fourth quarter due to weak demand in key export markets, while manufacturers have been dealing with both falling orders and electricity cuts due to power shortages.

The regional manufacturing hub reported a12.3% decline in exports in the first five months of this year, dragged by shrinking shipments of key products smartphones, electronics and garments.