Vietnam's December inflation slows for fourth straight month

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Vietnam's inflation slowed for a fourth month in December, adding to the case for the central bank to lower interest rates even as the nation grapples with the quickest price gains in Asia.

Prices rose 18.13 percent in December from a year ago, compared with a 19.83 percent pace reported earlier for November, the General Statistics Office said in Hanoi Friday. They climbed 0.53 percent this month from November.

Vietnamese Prime Minister Nguyen Tan Dung said in a Dec. 6 speech that the government has inflation under control and expects the pace of price increases in the country to slow to about 9 percent next year. Vu Duc Dam, chairman of the Government Office, said on Dec. 1 the government has asked the State Bank of Vietnam to consider lowering rates.

"A lower inflation number will be used as an argument to cut," said Thomas Harr, the Singapore-based head of Asian foreign-exchange strategy at Standard Chartered Plc, which expects the central bank's refinancing rate to be reduced to 11 percent in 2012 from 15 percent now. "Given where inflation is, I think the market will see it as a negative for the dong if they cut."

Vietnam's government was advised this month by the International Monetary Fund and the World Bank not to ease monetary policy too soon. The IMF said "repeated calls for lower lending rates cast doubt on the government's resolve," while the World Bank said any "premature" loosening of policy risks economic instability.

The State Bank of Vietnam has raised its refinancing rate to 15 percent now from 9 percent at the beginning of the year, with the latest increase in October. While the repurchase rate has doubled to 14 percent since November 2010, the last move in the repo rate was a cut in July from 15 percent.

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