The State Bank of Vietnam (SBV) has decided to reduce regulatory interest rates by 0.5 to 1 per cent from March 15.

Under Decision No. 313/QD-NHNN issued on March 14, the rediscount interest rate will be cut from 4.5 per cent per annum to 3.5 per cent, while overnight lending rates in interbank electronic payments and loans to cover capital shortfalls in clearing payments of the SBV for credit institutions will be cut from 7 per cent per annum to 6 per cent.

The refunding interest rate will remain unchanged at 6 per cent per annum.

On the same day, the SBV also issued Decision No. 314/QD-NHNN to reduce the maximum short-term lending interest rate in Vietnam dong of credit institutions, from 5.5 per cent per annum to 5 per cent to meet capital needs for some economic sectors and industries.

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

In 2022, the SBV increased the regulatory interest rate by 1 per cent on September 23 and October 25 as the US Fed continually raised interest rates to curb inflation.