The State Bank of Vietnam said in a statement it will bring the refinance rate to 10 percent from 11 percent and also lower the discount rate to 8 percent from 9 percent, effective July 1.
"This is the central bank's reactive move to the low GDP growth in the second quarter," said Alan Pham, chief economist of VinaCapital, a fund management firm in Ho Chin Minh City that oversees assets at $1.6 billion.
Compared with a year earlier, Vietnam's gross domestic product (GDP) grew at 4.38 percent in the first half of 2012. The annual growth pace was 5.57 percent in the first six months of 2011.
For the April-June quarter, the annual growth rate was 4.66 percent, compared with 5.67 percent growth a year earlier.
Last year, Vietnam had rapid inflation, which peaked at 23 percent in August compared with a year earlier. In May this year, annual inflation fell below 10 percent. In June, Vietnam's consumer price index shrank on a month-to-month basis for the first time in more than three years, falling 0.26 percent from May.
As price pressures have eased and the global economic outlook worsened, the central bank has quickened its pace of policy easing. It last cut rates on June 11.
At the end of 2011, the central bank's refinance rate was 15 percent while the discount rate was 13 percent.