The State Bank of Vietnam (SBV) does not consider lowering its current policy rates at present as such a move would depend on the economic performance.

SBV’s Vice Governor Dao Minh Tu. Photo: SBV

SBV’s Vice Governor Dao Minh Tu made the remarks in reference to recent rumors that the central bank may adopt a more easing monetary approach in the coming time.

“The timing and adjustment of policy rates must be decided based on the actual situation, with the ultimate goal of keeping inflation under control and the stability of the exchange rate,” Tu said.

Meanwhile, Tu expected any new changes to the policy rates have to stay in line with the goal of ensuring macro-economic stability, along with the interest of businesses, people, and the security of the banking sector in the short- and mid-term.

In 2020, the SBV cut the policies rates three times for a combined of 1.5-2 percentage points per annum to support the economy amid Covid-19 impacts. Tu said, for the time being, the capital mobilization and lending rates of commercial banks are aligned with current economic indicators.

“We have to take into consideration the rights of people depositing money in the banks,” Tu stressed.

Moreover, given the abundant liquidity at banks and demand for credit is still low as the pandemic situation remains serious across the country, lowering policy rates or adjusting monetary instruments are “inappropriate” at this moment.

“The SBV would continue to closely monitor the market situation for timely adjustment, if necessary,” stated Tu, adding the SBV’s main objective is to manage policy rates for the interest of the people and businesses in the short-term and supporting a speedy economic recovery in the post-pandemic period.

For the last year and the first seven months of 2021, Tu noted the SBV has managed the monetary policy in a flexible manner and provide the legal framework for banks to restructure debts, waive or cut interest rates for customers affected by the pandemic.

To date, nearly 800,000 customers have received banks’ support with total outstanding loans of VND2,000 trillion (US$87.73 billion), and another VND18.8 trillion in interest rates were foregone.

In last month's meeting, 16 banks and credit institutions agreed to cut interest rates for total loans of VND20.3 trillion ($886.55 million) from now until late 2021.