Reducing operating interest rates: Basis for banks to lower deposit and lending interest rates

From June 19,loan interest rateOvernight interest rate in interbank electronic payment and lending to cover capital shortage in clearing payment of the State Bank for credit institutions is only 5%/year. Re-lending interest rate is 4.5%/year. Rediscount interest rate is only 3%/year.

At the same time, the highest interest rate for deposits from 1 to less than 6 months is only 4.75%/year. Particularly, the People's Credit Fund and microfinance institutions apply a reduction from 5.5%/year to 5.25%. The maximum short-term lending interest rate of credit institutions to serve a number of economic sectors and areas is reduced from 4.5%/year to 4%. The interest rate reduction is good news for many businesses.

“The State Bank has also operated a very flexible interest rate policy, reduced operating interest rates and also directed commercial banks through the Association tocommercial bank"Actively reduce lending interest rates to share difficulties with businesses, as well as create conditions for businesses to overcome difficulties at the present time" - Mr. Dao Minh Tu, Deputy Governor of the State Bank of Vietnam said.

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This will be the basis for banks to reduce the deposit and lending interest rates. In the past, banks have reduced interest rates many times, and some loan interest rates are even nearly equivalent to deposit interest rates.

Ms. Nguyen Anh Van - Deputy General Director of Lien Viet Post Bank, said: "We offer a limit of 8,000 billion VND to support customers with loans with the goal that customers will immediately use the support package with preferential interest rates from 7.5%/year".

The State Bank has also just provided additional information regarding the decision to reduce operating interest rates and the ceiling interest rate for deposits under 6 months. The adjustment to reduce the ceiling interest rate for deposits in VND for terms from 1 to under 6 months helps commercial banks reduce input costs, thereby creating favorable conditions to continue reducing lending interest rates to support customers in reducing financial costs.

Regarding the decision to reduce the ceiling interest rate for short-term loans in VND by credit institutions this time, it creates conditions for businesses and people to access low-cost loans to serve production and business in priority areas, key areas that are the driving force for economic growth in accordance with the Government's policy.

Regarding inflationary pressure, the State Bank affirmed that it is not subjective because core inflation is still quite high, averaging 4.83% over the past 5 months, plus the context of global inflation forecast to remain high.

Major central banks continue to tighten monetary policy, anchoring interest rates, such as the recent move by the US Federal Reserve to keep its operating interest rate unchanged. The State Bank will continue to closely monitor domestic and international developments, forecast inflation and market interest rates to direct credit institutions to have solutions to reduce costs to reduce lending interest rates./.