Vietnam’s central bank cuts deposit rates

HANOI - The State Bank of Vietnam (SBV) has cut its policy refinancing rate by 50 basis points to 6.50% effective from March 18 , thus easing the policy rate by a cumulative 850 nasis points bps since early 2012 to spur credit growth. The government’s credit growth target is 12-14% in 2014.

SBV also reduced the cap on deposit rates. Individual deposit accounts in USD were cut 25 basis points to 1.00%, while the corporate USD deposit rate was held at 0.25%. The last time the SBV cut deposit rates was in June 2013. The maximum rate on VND deposits for individuals also declined 100 basis points to 6.00%.
ANZ Bank says it views the rate reduction as providing limited support to credit growth. “The structural problem of high nonperforming loans continues to limit domestic demand, keeping credit growth soft,” ANZ says. www.live.anz.com (ATI).