Mon, 04 Dec 2023

HANOI, Sept. 21 (Xinhua) -- The State Bank of Vietnam (SBV) is forecast to continue cutting interest rates in the rest of 2023 as its current priority is to spur credit growth and support economic growth, Vietnam News cited experts on Thursday.

Experts said rising pressure on the foreign exchange rate and inflation are the main factors affecting the SBV's ability to continue lowering the policy rates in the remaining months of this year.

Banking expert Nguyen Tri Hieu forecasts that interest rates will further decrease by about 0.5 percentage points in the remaining months of this year.

"The rate cannot decrease as significantly as at the beginning of the year because banks must ensure their profitable business performance," he said.

Tran Hung Son, lecturer at the University of Economics and Law under the HCM City National University, warned that if interest rates are reduced too quickly, the difference between domestic and international interest rates will increase, especially with dollar-denominated interest rates.

The World Bank has recently also warned that there is not much room left for Vietnam to further loosen monetary policy.

Credit demand continues to be low even though interest rates have decreased.

Vietnam's further interest rate cut will increase the interest rate gap with global markets that potentially puts pressure on exchange rates, according to the bank's recent report.

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