Vietnam’s central bank said it won’t ease monetary policy further, resisting pressure from businesses to lower borrowing costs as inflation risks persist.
“We can affirm that all the policies we’ve done are right, with interest rates coming down to affordable levels,” State Bank of Vietnam Governor Nguyen Van Binh told heads of businesses at a conference in Hanoi today.
The central bank aims to “keep lending rates stable, at around 15 percent, for at least one year,” Binh told the companies after they asked for borrowing costs to be reduced to as low as 10 percent. Measures put in place to bolster economic growth are starting to take effect, and the authority will closely monitor money supply to prevent any pressures that can spur inflation, he said.
Easing inflation has given the central bank room to cut interest rates five times this year amid a faltering global recovery. The monetary authority told commercial lenders earlier this month to reduce rates on existing loans to a maximum of 15 percent, and aims to boost credit growth to about 8 percent to 10 percent in the second half of the year, after lending grew 0.76 percent in the first six months from the end of 2011.
“When they say they will not ease monetary policy, it means they will not increase the money supply in the banking system,” Le Xuan Nghia, a member of the National Financial and Monetary Policy Advisory Council, said by telephone from Ho Chi Minh City on Friday.
With the global economy weakening, policy makers in the region may need to deploy more fiscal and monetary measures to safeguard growth, the Asian Development Bank said on Thursday.