The State Bank of Vietnam (SBV) has decided to continue reducing regulatory interest rates, effective from May 25.

This will be the third time the interest rates have been cut this year.

Under the bank’s Decision No. 950/QD-NHNN issued on May 23, the overnight lending rate in interbank electronic payments and loans to cover capital shortfalls in clearing payments of the SBV for credit institutions will be cut from 6 per cent per annum to 5.5 per cent.

The refinancing interest rate will be reduced from 5.5 per cent to 5.0 per cent.

The rediscount interest rate remains unchanged at 3.5 per cent.

On the same day, the SBV also issued Decision No. 951/QD-NHNN on the maximum lending interest rate in VND of credit institutions.

The maximum rate for non-term and term deposits of less than one month remains unchanged at 0.5 per cent per annum.

The maximum for deposits with terms from one month to less than six months will be cut from 5.5 per cent per annum to 5.0 per cent.

However, the maximum interest rate in VND deposits at the People’s Credit Fund and microfinance institutions will be lowered from 6 per cent to 5.5 per cent per annum.

The interest rate on deposits with terms of six months or longer will be determined by the credit institution based on market supply and demand for capital.

The move was made following the recent issuance of resolutions by the National Assembly and the government on managing monetary policy and banking operations in a flexible, proactive, tight, and reasonable manner in harmony with fiscal policies and macro-economic policies, to curb inflation, stabilize the macro-economy and the monetary market, and reduce market interest rates for businesses and individuals, contributing to economic recovery, according to the SBV.

Earlier, in March and April, it cut the regulatory interest rates by 0.5-1 per cent per annum to support the economy.