The Hongkong and Shanghai Banking Corporation (HSBC) has predicted that the State Bank of Vietnam (SBV) will cut interest rates further in the next two weeks.
According to its report released on May 24, HSBC said faster-than-expected decline in inflation will prompt the SBV to reduce interest rate.
The consumer price index (CPI) was estimated to see a year-on-year decrease of 8.34 percent in May, marking the first single-digit rise since October 2010.
Successful implementation of tight measures in 2011 has slowed down inflation significantly from its peak of 23 percent in last August while dampening demand has driven prices down and slowed economic growth, the report says.
Bank lending cannot grow as expected as commercial banks have tightened their lending conditions to avoid bad debts.
In addition, high lending rates have discouraged local businesses.
The SBV has lowered interest rates twice since the beginning of this year. Source: VOV