Therefore, the State Bank of Vietnam (SBV) continues to closely monitor domestic and international developments, forecast inflation and market interest rates to direct credit institutions (CIs) to have solutions to reduce costs to reduce lending interest rates to support businesses to recover and develop production and business.
According to the State Bank of Vietnam's report, in the first 5 months of 2023, many economic indicators increased lower than the same period last year, reflecting the negative impact of sharply declining foreign demand and internal difficulties of the economy .
Some organizations forecast GDP growth in 2023 at 5.7 - 7.2%. Meanwhile, inflation and LPCB continued to slow down in the first 5 months of 2023 due to low economic growth, reducing demand-pull inflationary pressure.
“Compared to the same period, inflation decreased from 4.89% in January to 2.43% in May (decreased consecutively in March, April and almost unchanged in May), the average for the first 5 months of 2023 was 3.55%.
LPCB decreased from 5.21% in January to 4.54% in May, the average for the first 5 months of 2023 is 4.83%. Many forecasts indicate that the possibility of achieving the average inflation target for the whole year of 2023 of about 4.5% is relatively feasible; international organizations forecast the average inflation in 2023 at about 3% - 5.5%" , the representative of the State Bank explained.
The monetary market is stable, the liquidity of the credit institution system is abundant and redundant, promptly meeting the payment and disbursement needs of the economy. The foreign exchange market is stable, liquidity is smooth, and legitimate foreign exchange needs are fully met.
“Since the beginning of 2023, the SBV has purchased a large amount of foreign currency to supplement its foreign exchange reserves, contributing to circulating a large amount of VND. The above solutions have contributed to creating abundant liquidity in the market, thereby stabilizing and reducing the interbank market interest rate level, supporting credit institutions to reduce deposit interest rates and reduce lending interest rates for the economy,” the SBV said.
The State Bank directs banks to reduce lending interest rates, unblocking capital sources for businesses (Illustration photo).
In the context of inflation increasing but showing a slowing trend, economic growth still facing many difficulties, in order to create more foundation for credit institutions to continue reducing lending interest rates and removing difficulties for businesses and people, supporting economic growth recovery according to the orientation of the National Assembly and the direction of the Government and the Prime Minister, from the beginning of 2023 to now, the State Bank has adjusted down the operating interest rates 4 times with a total reduction of 0.5-2.0%/year.
At the same time, the State Bank directed credit institutions to thoroughly cut costs to reduce lending interest rates to support businesses, people and the economy to restore production and business.
The SBV's continued adjustment of operating interest rates is a flexible solution, suitable to current market conditions, to achieve the goal of reducing lending interest rates to support the economic growth recovery process according to the policy of the National Assembly and the direction of the Government and the Prime Minister; thereby, the SBV continues to orientate the reduction of market lending interest rates, contributing to removing difficulties for businesses, people and the economy.
At the same time, the adjustment to reduce the ceiling interest rate on VND deposits for terms from 1 to less than 6 months also helps credit institutions reduce input costs, thereby creating favorable conditions to continue reducing lending interest rates to support customers in reducing financial costs.
The decision of the State Bank of Vietnam to reduce the ceiling interest rate for short-term loans in VND of credit institutions this time creates conditions for businesses and people to access low-cost loans to serve production and business in priority areas, key areas that are the driving force for economic growth in accordance with the Government's policy.
The continued reduction of the operating interest rate by the State Bank of Vietnam affirms and establishes the trend of interest rate reduction for the market in the coming time, thereby orienting credit institutions to be more bold and drastic in reducing lending interest rates, accompanying businesses and people, contributing to promoting economic growth and recovery.
However, the SBV is not subjective about inflationary pressure in the context of global inflation forecast to continue to remain at a high level; major central banks continue to tighten monetary policy, keeping interest rates at high levels.
Therefore, the State Bank continues to closely monitor domestic and international developments, forecast inflation and market interest rates to continue directing credit institutions to have solutions to reduce costs to reduce lending interest rates to support businesses to recover and develop production and business.
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