Vietnam central bank to cut rates on March 15 amid SVB turmoil

  • Vietnam’s central bank said on 14 Mar it was cutting several policy rates to increase liquidity and support economic growth, in a surprise move that set it apart from regional peers amid the global turmoil caused by the fall of Silicon Valley Bank.
  • It is the first such move for Vietnam’s central bank since Oct 20 and it reverses a trend of rate hikes, with the last one in Oct 22.
  • The central bank justified the move, saying the country’s inflation was under control. The average rate for the Jan-Feb 23 period was 4.6% on the year, above the full-year inflation target of 4.5%, but in Feb 23 the inflation rate was 4.3%.
  • It also said it would stay vigilant as monetary authorities around the world are still hiking interest rates with an eye on signals from the U.S. Federal Reserve’s upcoming policy decision after the collapse of tech-focused lender Silicon Valley Bank.
  • The annual rediscount rate, overnight electronic interbank rate, and interest rate for loans to offset capital shortages in clearance between the central bank and domestic banks, would each be cut by 1 percentage point from 15 Mar, the central bank said in a statement.
  • 15 Mar’s statement included a decrease in the cap on dong loan rates at commercial banks by 50 basis points depending on loan maturities.

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