Crédit Agricole: Vietnam May Increase Interest Rate to 10 Percent

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May 27 – French retail bank leader Crédit Agricole estimates in a recent report that Vietnam’s central bank may allow the country’s benchmark interest rate to rise to 10 percent in an effort to combat inflation and promote healthy economic growth.

Inflation in the country has hovered above 9 percent over the past three months and Crédit Agricole believes that it will keep going up as the year progresses.

“Inflation is set to move higher and hit double digits later this year, prompting the central bank to resume raising interest rates,” the company said in their report. The Vietnamese government, meanwhile, raised its 2010 inflationary target from 7 percent to 8 percent earlier this month.

The State Bank of Vietnam allowed its principal interest rate to increase from 7 percent to 8 percent on Dec. 1 of last year, but may need to revisit this again soon. The government has set its economic growth target for 2010 at 6.5 percent, slightly higher than the 6.3 percent GDP growth anticipated by Crédit Agricole.