Three Factors Affecting Interest Rate Policy Decision
The State Bank of Vietnam will likely make adjustments in its interest rate policy by the end of March based on the conditions of three important factors: core CPI data, credit growth rate and money supply, said analysts with Dau tu Chung khoan newspaper.
Core CPI (excluding impacts of food, foodstuff and energy) is more important than CPI because it measures changes in the prices of necessities, whose prices are not affected much by the central bank’s monetary policy.
The central bank often decides on its interest rate policy based on credit growth rate and money supply, and its move to raise the base interest rate in November of 2009 was an example.
Last year, credit growth rate reached 35.41%, much higher than the target 25%-27% and money supply exceeded 25%. (Securities Investment, Stox.vn)
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