The State Bank of Vietnam announced on Tuesday it will cut its policy rates again to prop up economic growth.

The State Bank of Vietnam (SBV) said that interest rates have become stable with the lending interest rate hovering around 9.3 percent per annum.

The State Bank of Vietnam, the central bank, announced five separate decisions on March 31 to further lower some key interest rates, with effect from April 3. This is the second round of rate cuts in March.

Prime Minister Pham Minh Chinh has asked the State Bank of Vietnam (SBV), the nation’s central bank, to slash interest rates, make loans more accessible and focus on lending to key economic sectors.

Vietnam's lending interest rates are higher than many countries in the world, while last year, Vietnam was one of the countries with the lowest inflation level. This paradox needs to be explained to find solutions to ease the burden on businesses.

Most banks are quoting deposit interest rates under 9.5 percent as agreed. But some are paying higher than the quoted rates.

Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong has directed banks to continually reduce input costs with an aim to cut loan interest rates.

After Vietcombank, HDBank has recently announced to lower lending interest rates for enterprises doing business in many industries with a total interest rate reduction of up to VND120 billion.

The Vietnamese dong may lose 4 percent of its value against the USD in 2022, while the deposit interest rate is predicted to lose 30-50 points after the US FED’s move and SBV’s first policy responses.

ADB Country Director Andrew Jeffries has talked on the recent interest rate hike by the State Bank of Vietnam in the context of the Fed, ECB and a number of countries raising their rates to curb inflation.

Prime Minister Pham Minh Chinh has asked the State Bank of Vietnam (SBV) to consider raising the deposit interest rate ceiling, but to stabilize lending interest rates.

During a lesson about economic recession at Columbia University (USA) last year, my professor explained that to prevent a banking crisis, the world applies two policy approaches – repression or prudential.

Interbank interest rates rose to a 10-year high before dropping a little last weekend.

The size of the corporate bond market is estimated at some VND1,374 trillion, equivalent to 15% of GDP. The Government aims to raise this figure to 20% by 2025.

The Government's outstanding debt by the end of 2022 is estimated to decrease by about VND57 trillion, down 2 percent compared to the outstanding balance at the end of 2021.

Despite efforts to increase cheap capital sources, many banks reported their current account savings account (CASA) rate in the second quarter of 2022 declined compared to the previous quarter.

The first half of the year saw interest rates edging up 0.5-1 percentage point against the end of last year. Liquidity in the banking system was blamed for interest rate hikes.

Deposits at banks have increased sharply following the commercial banks’ raising of interest rates. The highest deposit interest rate is 7.7 percent per annum.

The State Bank of Vietnam is facing multiple pressures in 2022 in managing the foreign exchange rate