Anticipated Interest Rate Reduction to Boost Economy

The State Bank of Vietnam (SBV) has decided to lower key interest rates by 0.25%-0.5% from June 19, which is expected to have a positive impact on the economy by increasing credit activities and liquidity. The decision was made based on four main reasons, including the end of the Fed’s interest rate hike, a decrease in inflation since February, stable domestic currency demand, and a drop in exports and investment in industrial production in May.

The reduction in interest rates is expected to ease pressure on interest rates and exchange rates in the domestic market. Experts believe that the SBV’s move will provide favorable conditions for people and businesses to access capital at lower interest rates, and commercial banks to cut their deposit and lending rates. The reduction in operating interest rates will benefit all businesses and individual customers, which is expected to boost consumption, production, and business activities, resulting in a double impact on the economy.

However, experts also emphasize the need for stronger fiscal policies and public investment to support businesses and the economy, in addition to the interest rate cut. The SBV has affirmed its commitment to monitoring inflation pressure and directing credit organizations to reduce lending interest rates to support businesses during the recovery and development process.