Monetary policy should not be tightened further because money supply and credit growth has already been restrained more than they should be, according to Duong Thu Huong, General Secretary of the Vietnam Banks Association.
Vietnam's high inflation is not a result of monetary reasons, but is driven by increases in electricity, petrol and coal prices, Huong said.
In an interview published on the central bank's website on Tuesday, Huong said measures taken by the government so far have proved effective. The currency market has begun stabilizing and dollar hoarding has eased, making it easier for banks to buy US currency from corporate and individual clients.
However, it is necessary to understand the real reasons behind soaring inflation so that the right policies can be issued, she said.
Vietnam's central bank on April 1 raised borrowing costs for the second time in less than a month, increasing the refinancing rate to 13 percent from 12 percent. The repurchase rate was also raised to the same level.
Huong noted that credit growth had never before been controlled under 20 percent like it is now. As a result, the government should not tighten monetary policy further and should focus on cutting public investment.
Consumer prices climbed 17.51 percent in April from a year earlier, according to the General Statistics Office in Hanoi. The rate is the highest since December 2008.
Minister Nguyen Xuan Phuc, head of the government's office, said inflation will cool in June or July if concerted measures are taken, particularly to cut public investment.