HANOI – VIETNAM’S central bank said on Thursday it would cut its key interest rate for a third time in a month, to 11 per cent, citing ‘the negative impact of the global financial crisis’.
The bank also reduced banks’ reserve requirements to free up credit.
The State Bank of Vietnam (SBV) had raised benchmark rates several times early in the year to fight double-digit inflation but it switched course in late Oct, launching a series of rate cuts to stimulate the economy.
The benchmark rate cut from 12 per cent and the reserve requirement reduction ‘aim to actively prevent the negative impact of the international financial crisis and economic recession”, said the bank in an online statement.
The monetary loosening since last month reverses a series of three rate hikes earlier this year, from 8.25 per cent to 14 per cent.
The government is trying to control inflation which has been in double digits all year and eased to 26.7 per cent in Oct.
Vietnam, a major exporter of manufactured goods such as clothing and footwear and commodities including rice, coffee and seafood, has been hit by downturns in the United States, Europe and other markets.
The Communist regime is aiming for annual economic growth of around 6.5 per cent for this year and next, down from 8.5 per cent last year.
The SBV said it would cut the refinancing rate to 12 per cent from 13 per cent and the discount rate by one percentage point to 10 per cent.
Overnight interest rates for electronic and compensation payments on the inter-bank market were to be reduced to 12 per cent from 13 per cent. — AFP