Vietnamese central bank governor Nguyen Van Giau expressed confidence on Monday in government steps to curb soaring inflation, days after raising key policy rates for the second time in a month in the face of stubbornly high prices.
Giau declined to say how much he expected inflation, which hit a 28-month high in April, to dent gross domestic product growth. The government is targeting 7-7.5 percent growth, but many economists say that range may be unattainable.
"We have begun focusing on implementing (inflation control policies), and they will surely have an effect in the coming time," Giau told reporters ahead of an annual meeting of members of the Asian Development Bank (ADB) in Hanoi.
Authorities have raised various interest rates several times since mid-February, trimmed the official credit growth target for the year, cracked down on black market foreign currency trading and vowed fiscal spending cuts.
Giau said credit grew 5.6 percent by late April from the end of last year. The new target is to keep credit growth under 20 percent this year.
Managing rising inflationary pressures without derailing growth is expected to be a core topic at the ADB meeting that runs from May 3-6.
Indeed, the ADB warned last month economic overheating and inflation threatened a sustained recovery in parts of developing Asia, and said a sustained rises in food prices could pull tens of millions into poverty.
Ayumi Konishi, the ADB's chief representative in Vietnam, said monetary and fiscal tightening policies detailed in a mid-February government resolution were the "right set of policies".
"Economic policies always take time to get an actual impact. It's not like poison. You don't see the result overnight," he said.
"We do believe that from May onwards, at least on the monthly level, the monthly inflation rate should come down."
The consumer price index rose 17.51 percent in April from a year earlier after rising an annual 13.89 percent in March.
The April inflation rate was the highest since December 2008, and the economists say it follows an over-emphasis on growth last year and inaction in the face of signs that inflationary pressures were rising.
On Friday the State Bank of Vietnam increased both the refinance rate and the discount rate by 100 basis points.
Most economists believe inflation will not peak for several more months, and Konishi said the annual figure will start to abate in September.
"We hope that the government will be continuously determined to maintain this policy, and we certainly hope that the Vietnamese people will be patient," he said.
Economists say high inflation has persisted in part because of double-digit increases in the prices of electricity as well as petrol, diesel and other fuels.