The State Bank of Vietnam (SBV) has announced Decision No 1870 on the adjustment of refinancing and re-discount interest rates. The interest rates have been lowered from 6.25 percent to 6 percent and from 4.25 percent to 4 percent, respectively.

From left: Vo Tri Thanh, Le Xuan Nghia, Can Van Luc

The central bank of Vietnam has followed the moves by other central banks in the world to lower the prime interest rate in the context of unfavorable conditions in the world economy.

Vo Tri Thanh, former deputy director of CIEM (Central Institute of Economic Management)

Global economic growth is slowing down. Many countries have loosened monetary policies. In such a context, Vietnam, an open economy, is hardly an exception.

Global economic growth is slowing down. Many countries have loosened monetary policies. In such a context, Vietnam, an open economy, is hardly an exception.

The move of the State Bank aims to minimize the negative effects of the world’s economic growth slowdown and partially support production and business activities, thus helping economic growth.

However, monetary policy not only needs to support growth, but also ensure macroeconomic stability.

It is now a ‘sensitive moment’. Meanwhile, we still have other issues to deal with, including the surplus in trade with the US. Also, the US still puts Vietnam among the countries that need watching for currency manipulation.

Therefore, we need to be cautious. The modest adjustment by SBV reflects cautiousness.

Le Xuan Nghia, former deputy chair of the National Finance Supervision Council

I think the move by the central bank is reasonable which is in line with the common trend in the world. Other central banks have also eased m interest rates to support economic growth.

The trend to lower interest rates in the world may continue because the global economy is in a period of cyclical decline. The global trade growth rate is low, thus greatly affecting Vietnam's economic growth.

In Vietnam, the inflation rate is low and this is an opportunity to cut interest rates.

However, I think the interest rate decrease is still modest and SBV should consider cutting interest rate further in the last months of the year.

Can Van Luc, chief economist of BIDV

This is a reasonable decision because of three reasons.

First, more than 40 central banks of emerging countries have cut interest rates. The US FED is likely to slash interest rate further in the time to come.

Second, as the CPI in the first 8 months of the year was at a 3-year low, the interest rate cut won’t put pressure on inflation.

Third, the interest rate cut will pave the way for a lending interest rate reduction.

Mai Lan 

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