Vietnam to Keep Base Interest Rate Unchanged at 8% for April
The State Bank of Vietnam, the country’s central bank, said Thursday that it will keep the base interest rate unchanged at 8% per annum for April in a move to stabilize the macro economy.
This is the fifth consecutive month the central bank maintains the rate steady though inflation in March rose 0.75% from last month, the central bank said in a statement posted on its website.
The refinancing and rediscount rates will be at 8% and 6% per annum, respectively while the overnight rate on inter-bank market will be 8%.
Commercial banks have proposed the central bank to abolish the deposit interest rate cap of 10.5% per annum, allowing them to raise the savings interest rates freely to attract more funds to boost liquidity for the domestic economy.
Analysts, however, warned that the removal may trigger a race for higher interest rates among local banks, raising borrowing costs for businesses.
HSBC has forecast that the central bank could raise the dong base rate by another one percentage point from the current 8% per annum in few next weeks, given high inflationary pressures.
The inflation is likely to soar 12% by the second quarter of this year, HSBC said in the latest report.
Vietnam’s economy is estimated to have expanded between 5.7% and 5.9% in the third quarter of 2010 but it is not high as compared to the growth of 6.9% in Q4 2009. (SBV)
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