Vietnam banks may cut lending rates as inflation set to ease

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It's possible for Vietnam to keep inflation at 9 percent this year, which is a "great opportunity" to lower both lending and deposit interest rates, said Vu Viet Ngoan, head of the National Financial Supervisory Committee.

Because the global economy is expected to expand by between 2.4 and 3.2 percent this year, compared to 4 percent in 2011, prices of goods and materials will fall, Ngoan said in an interview with Dau Tu newspaper on Friday.

"With large imports, equal to 89 percent of the country's GDP, Vietnam will see inflation pressures ease considerably when global prices fall," he said.

Ngoan said even after taking possible price hikes in coal and electricity into consideration, inflation is likely to be around 9 percent in 2012.

Then the dong lending rate could be lowered by 4 percentage points, to 15 percent to 16 percent per year, Ngoan said, adding that further cuts are possible if the economy stabilizes.

He said a deposit rate of around 10.5 percent per year would be enough when inflation is brought to 9 percent.

The State Bank of Vietnam plans to make appropriate adjustments to interest rates after the first quarter, central bank governor Nguyen Van Binh told an economic conference this week.

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