Vietnam central bank plans further rate cuts to spur lending

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The State Bank of Vietnam has said it may reduce the maximum limit on deposit interest rates to 9 percent by the end of the year in an attempt to make loans cheaper for businesses.

The cut will be made if the economy is stable and inflation is under control, the central bank told a group of the nation's largest lenders last week.

The deposit rate cap was lowered to 11 percent from 12 percent on May 28. The central bank also cut key policy rates by 1 percentage point for the third month in a row, bringing refinancing rate to 12 percent and discount rate to 10 percent.

News website VnExpress cited a banker who attended the meeting with the central bank as saying it is likely the deposit ceiling will be brought down to 10 percent at the end of June, considering one-month intervals between previous cuts.

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Vietnam cuts key rates for second time in a month

The central bank has been taking strong monetary measures over the past three months to boost lending. Loans by the banking system at the end of May are estimated to fall 0.2 percent from the end of last year, news website VnEconomy reported June 1, citing the State Bank of Vietnam.

The government said last month it aims to have credit expand by 2 percent each month through the end of the year.

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