Following the resolutions of the National Assembly and the directions of the Government, the State Bank of Vietnam (SBV) has conducted the monetary policy management in a proactive and flexible manner, in close collaboration with the fiscal policy and other macro policies in order to control the inflation, support the economic recovery, and promptly adapt to the international and domestic market developments, thereby maintaining the money and forex market stability and ensuring a prudent banking sector.
SBV Headquarters
However, the world inflation is still at a high level, and the US Federal Reserve (Fed) has increased the federal funds target rate five times, most recently to 3-3.25% p.a., it is forecast that the rate could continue to be raised by end of 2022 and in early 2023. The appreciation of the USD has put pressure on the common interest rates, the exchange rate in the domestic market and the inflation. In order to ensure the consistency in conducting the monetary management measures, contributing to controlling the inflation, maintaining the macro-economic stability and ensuring a prudent banking system, the SBV has decided to further adjust the key interest rates, effective from October 25, 2022, specifically as follows:
1. Decision No. 1809/QD-NHNN dated October 24, 2022 on the refinancing interest rate, the rediscounting interest rate, the overnight rate for the inter-bank electronic payments, and the interest rate of loans to finance short-term balances in the clearing transactions between the SBV and the commercial banks. Accordingly, the refinancing rate is raised from 5.0% to 6.0% p.a.; the rediscounting rate increases from 3.5% to 4.5% p.a.; the overnight rate for the inter-bank electronic payments and the interest rate of loans to finance short-term balances in the clearing transactions between the SBV and the commercial banks increase from 6.0% to 7.0% p.a.
2. Decision No. 1812/QD-NHNN dated October 24, 2022 stipulating the interest rate caps for the mobilization in VND, which are applied to organizations’ and individuals’ deposits at the credit institutions and the foreign bank branches as stipulated in Circular No. 07/2014/TT-NHNN dated March 17, 2014. Accordingly, the maximum VND mobilization interest rate for demand and below 1-month terms is raised from 0.5% p.a. to 1% p.a.; the maximum VND mobilization interest rate for time deposits of 1-month to below 6–month terms increases from 5.0% p.a. to 6.0% p.a.; the maximum VND mobilization interest rate for time deposits of 1-month to below 6–month terms at the People’s Credit Funds and the Micro Finance Institutions is raised from 5.5% p.a. to 6.5% p.a.; the interest rates for time deposits of 6-month plus terms will be determined by each credit institution on the basis of the market capital supply and demand.
3. Decision No. 1813/QD-NHNN dated October 24, 2022 on the lending interest rate cap for short-term loans in VND charged by the credit institutions and the foreign bank branches, applicable to a number of priority fields and sectors in accordance with Circular No. 39/2016/TT-NHNN dated December 30, 2016. Accordingly, this rate is raised from the current 4.5% p.a. to 5.5% p.a.; the maximum lending rate for short-term loans in VND applied to the People’s Credit Funds and the Micro Finance Institutions for the same priority fields and sectors increases from 5.5% p.a. to 6.5% p.a.
In the coming time, the SBV would continue to closely monitor the developments in the international and domestic markets to promptly manage the monetary policy instruments and measures in a flexible and consistent manner, and stay ready to intervene in the money and forex markets in order to meet the liquidity demands of the credit institutions, thereby contributing to maintaining the market stability and ensuring safe and sound banking operations.
Le Hang