Hanoi (VNA)𝔉 – The State Bank of Vietnam on March 31 announced that it will cut regulatory interest rates by 0.3% - 0.5% per annum, to be effective from April 3.

Accordingly, the refinancing rate will be lowered from 6% per annum to 5.5% per annum while the rediscounting rate, the overnight rate for inter-bank electronic payments and the rate applied to loans to cover capital shortfalls in clearing payments of the SBV for credit institutions will be maintained 3.5% per annum; 6.0% per annum, respectively. Besides, the SBV also reduces the the interest rate caps for capital mobilization in VND. Accordingly, the maximum interest rate for savings for demand and below 1-month terms is reduced from 1% per annum to 0.5% per annum; the maximum interest rate for deposits of 1-month to below 6–month terms from 6.0% per annum to 5.5% per annum; the maximum interest rate for deposits in VND at people’s credit funds and micro finance institutions from 6.5% per annum to 6.0% per annum. The interest rates for time deposits of 6-month plus terms will be determined by each credit institution on the basis of the market capital supply and demand.  The interest rate cap for short-term loans in VND for certain fields and sectors will be reduced from 5.0% per annum to 4.5% per annum, and that for VND short-term loans in those sectors and areas provided by people’s credit funds and micro finance institutions from 6.0% per annum to 5.5% per annum. In addition, the interest rate applied to deposits in VND of the State Treasury and Deposit Insurance of Vietnam will be lowered from 0.8% per annum to 0.5% per annum; and the interest rate applied to deposits in foreign currencies of the State Treasury will be maintained at 0% per annum. The interest rate applied to deposits in VND of  the Vietnam Development Bank, Vietnam Bank for Social Policies, people’s credit funds and micro-finance institutions will be cut down from the current 0.8% per annum to 0.5% per annum.  The SBV said the continued reduction of operating interest rates is a flexible solution based on the market conditions towards the goal of further removing hurdles for businesses and the economy. Having followed closely the Resolutions of the National Assembly and the directions of the Government and the Prime Minister, the SBV has managed the monetary policy and the banking operations in a proactive, flexible and effective manner, in close coordination with the fiscal policy and other macro policies, in order to contribute to controlling inflation, maintaining macro-economic stability, stabilizing the money market, and reducing the lending interest rates in support of economic recovery. According to the SBV, over the past time, the global economic outlook has undergone some uncertainties, the inflation rates in many countries have remained at high levels; the domestic economic growth has faced with various difficulties; the growth rate in the first quarter of 2023 was lower than those of the same previous periods. On the positive side, the domestic inflation has been controlled; the liquidity of credit institutions and foreign bank branches are abundant, meeting the payment demand of the economy. Moreover, credit institutions have managed to cut down on their costs and reduce the common mobilising interest rates. This is the second time the SBV has cut down the key interest rates in March. Last year, the SBV adjusted the regulatory interest rates up twice, each time by 1%, on September 23 and October 25./.