Central bank to cut deposit interest rate ceiling from Monday

By Reuters   March 31, 2023 | 06:29 am PT
Central bank to cut deposit interest rate ceiling from Monday
A Vietnamese flag flies atop the State Bank building, near the Vietcombank and Bank for Investment and Development of Vietnam buildings, in central Hanoi, Vietnam November 23, 2017. Photo by Reuters
The central bank on Friday said it would cut caps on interest rates of dong-denominated deposits from April 3, by 0.5 percentage points to between 0.5% and 6.0% depending on maturities.

It said the overnight electronic interbank rate would also be kept at the current level of 6.0%.

The bank also said it will from Monday lower its refinance rate by 50 basis points to 5.5%, its latest move to support economic growth that bucks a trend among regional peers.

The State Bank of Vietnam (SBV) said in a statement it would keep the discount rate unchanged at 3.5%.

Earlier this month, the SBV cut several policy rates to increase liquidity and help spur growth, in what was a surprise move amid global financial turmoil.

The announcement came just hours after a senior central bank official said the U.S. Federal Reserve's move to ease its rate hikes meant Vietnam would consider further cutting rates in future to spur growth.

Vietnam's economic growth slowed to 3.32% in the first quarter, against a 5.92% expansion in the fourth quarter of 2022.

The SBV pledged on Friday to keep monetary policy flexible for the rest of the year to support economic stability amid external challenges, with space for more interest rate cuts while it prioritises keeping inflation in check.

It was confident the country can keep inflation below 4.5% this year, after the consumer price index in February edged down from the previous month.

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