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Vietnamese central bank to keep interest rate at 8 pct (02/06)
06/08/2010 - 9 Lượt xem
The base rate will stay at 8 percent in June, the State Bank of Vietnam said in a statement on its website monday. The benchmark was raised to 8 percent from 7 percent on Dec. 1.
Vietnam is encouraging banks to reduce lending rates and boost credit growth, which was 8 percent in the first five months of 2010 compared with 38 percent for all of last year. Still, the base rate is losing its “relevance” after the central bank eliminated links capping market lending rates at 150 percent of the benchmark, according to Australia & New Zealand Banking Group Ltd.
“The base rate can now be considered as a statement of intent of what they’re going to do with rates at state-owned banks, as having a signaling effect,” said Jonathan Pincus, a Ho Chi Minh City-based economist with the Vietnam program at the Harvard Kennedy School. “But by and large the extent to which people will pay attention to it now is minimal.”
Credit grew about 8 percent in the first five months of this year after loans expanded 1.7 percent in May, Thoi Bao Kinh Te Vietnam newspaper reported Monday, citing central bank Governor Nguyen Van Giau. The government is targeting 25 percent growth in loans in 2010. Prime Minister Nguyen Tan Dung has asked Vietnamese banks to reduce borrowing costs to boost lending and support economic growth.
Lending rates
The central bank’s move to scrap the link between the benchmark rate and market lending rates earlier this year caused borrowing costs to climb as high as 18 percent before declining to about 14 percent, according to HSBC Holdings Plc.
“There just hasn’t been a lot of lending recently in Vietnam,” said Pincus. “Even at interest rates of 14 percent, not many corporations are willing to take on debt.”
Vietnamese inflation slowed for a second month in May as ample food supplies cooled prices, according to the General Statistic Office in Hanoi. Consumer prices climbed 9.05 percent from a year earlier, after rising 9.23 percent in April.
