State Bank lowers operating interest rates for the third time this year

On March 23, the State Bank announced 2 Decisions to reduce interest rates, effective from May 25, 2023.

Accordingly, the overnight lending interest rate in interbank electronic payments and lending to cover capital shortages in clearing payments of the State Bank for credit institutions will decrease from 6.0%/year to 5.5%/year.

Next, the refinancing interest rate decreased from 5.5%/year to 5.0%/year; the rediscount interest rate remained at 3.5%/year.

In addition, the monetary authority also changed the maximum interest rate for deposits in Vietnamese Dong (VND) of organizations and individuals at credit institutions according to the provisions of Circular No. 07 dated March 17, 2014.

Accordingly, the maximum interest rate applied to demand deposits and deposits with terms of less than 1 month remains at 0.5%/year; the maximum interest rate applied to deposits with terms from 1 month to less than 6 months decreases from 5.5%/year to 5.0%/year.

In particular, the maximum interest rate for deposits in VND at People's Credit Funds and Microfinance Institutions is reduced from 6.0%/year to 5.5%/year; the interest rate for deposits with terms of 6 months or more is determined by credit institutions based on market capital supply and demand.

Finance - Banking - State Bank lowers operating interest rates for the third time this year — Lowering the operating interest rate will create conditions for the interest rate level to decrease, making the cost of capital use low, thereby improving the business performance of enterprises.

This is the third time the State Bank has decided to reduce the operating interest rate in 2023. Previously, in March, this agency adjusted the operating interest rate twice.

In particular, for the first time, the monetary management agency has adjusted down 1% for some operating interest rates and reduced 0.5% maximum short-term lending interest rate in VND for borrowers to meet capital needs serving some economic sectors and industries.

For the second time, the new Operator issued a series of decisions to reduce the remaining interest rates, especially reducing the refinancing interest rate by 0.5% and the deposit interest rate ceiling by 1%.

According to the latest report of BIDV Securities Company (BSC), the current economy needs a loose monetary policy because the economic growth rate is low and inflation is gradually stabilizing. This is the time when monetary policy needs to be directed towards economic growth.

According to BSC, lowering the operating interest rate will create conditions for the interest rate level to decrease, making the cost of capital use low, thereby improving the business performance of enterprises.

People may decide to consume more due to low borrowing costs. This will stimulate economic growth and increase the volume of orders for businesses .

Source