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SBV urges banks to keep interest rates stable

The Saigon Times

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HCMC – The State Bank of Vietnam (SBV) has told banks to maintain constant lending interest rates by cutting costs and strengthening the operating capability, according to Deputy Governor Dao Minh Tu at a press briefing held yesterday, September 23.

The central bank will not regulate lending interest rates as they are set by lenders and their clients, added Tu.

The statement came after the SBV decided to hike key interest rates for the first time in two years, including deposit, rediscount and refinancing rates.

Commercial banks also announced new deposit interest rates.

The national financial market saw major adjustments in response to the announcement by the U.S. Federal Reserve to raise interest rates by 0.75 percentage point to 3%-3.25%.

As banks are facing problems mobilizing deposits, raising interest rates is meant to help reduce liquidity constraints. Still, the measure will result in higher loan rates.

It has been somewhat at odds with the SBV’s commitment to lower lending interest rates between 2022 and 2023, the local media reported.

However, recent changes in the global financial market, particularly interest and currency rates, have put a substantial burden on the SBV’s operations, according to Pham Chi Quang, deputy director of the Monetary Policy Department under the SBV.

The SBV’s key aims now are to control inflation, maintain macroeconomic stability and sustain the exchange rate in the face of a tightening monetary policy globally, said Tu.

The central bank has kept its credit growth target of roughly 14% this year, with potential revisions based on market movements.

The country’s credit has climbed by 10.47% as of mid-September compared to late 2021 and 17.19% over the same period last year.

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