Vietnam’s central bank slashed interest rates for the sixth time this year and lowered the cap on deposit interest rates to help companies cope with difficulties in production and business.
The State Bank of Vietnam’s refinancing rate was cut to 9 percent from 10 percent, while the discount rate was cut to 7 percent from 8 percent. The cap on dong deposit interest rates was lowered to 8 percent from 9 percent.
The central bank also capped the short-term lending rate for some sectors at 12 percent. Those sectors include agriculture, exports, high technology and small- to medium-sized companies.
The new rates take effect Dec. 24.
The country's economy is expected to grow 5.2 percent this year, which would be the slowest growth since 1999. The economy has been hampered by a lack of lending as banks face rising bad loans, while the nation faces the risk of premature easing that can trigger price pressure.
High interest rates have been the the main reason for slow credit growth this year. Many companies have proactively reduced their inventory levels since the cost of financing inventory is so high.