Vietnam’s Central Bank to Keep Interest Rate at 8%

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HANOI, Jun. 1 – Vietnam’s central bank announced on Monday that it will leave its benchmark interest rate unchanged next month, keeping the measure at the same level held since early December.

The base rate will stay at 8 percent in June, the State Bank of Vietnam said in a statement on its web site yesterday. The benchmark was raised to 8 percent from 7 percent on Dec. 1.

Vietnam is encouraging banks to reduce lending rates and boost credit growth, which was 8 percent in the first five months of 2010 compared with 38 percent for all of last year.

Credit grew about 8 percent in the first five months of this year after loans expanded 1.7 percent in May, the central bank said. According to state media, the government is targeting 25 percent growth in loans in 2010.

Prime Minister Nguyen Tan Dung has asked Vietnamese banks to reduce borrowing costs to boost lending and support economic growth.