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Economy

Vietnam central bank to cut policy rates Wednesday to boost growth

Second reductions in less than two months 'to overcome difficulties' of COVID-19

The central bank is pitching in to help Vietnam try to keep its economic growth above 5% this year.   © Reuters

HANOI (Reuters) -- The State Bank of Vietnam announced a reduction in its policy rates, making a second cut in less than two months to help the economy weather the impact of the coronavirus pandemic.

With just 288 infections and no deaths, the Southeast Asian nation has seen no community infections for nearly a month, putting it on course to resume economic activity sooner than most others in the region.

The refinancing rate will be cut to 4.5% from 5% and the discount rate to 3% from 3.5%, effective Wednesday, the central bank said in a statement.

The rate cut is part of the government's efforts to "help businesses to overcome difficulties and ensure social security amid the COVID-19 pandemic," the central bank said in a statement posted on its website on Tuesday.

The central bank said it would also lower the caps on the interest rates of dong-denominated deposits from Wednesday, cutting by 0.3-0.5 percentage points, depending on the maturities.

Prime Minister Nguyen Xuan Phuc said last week Vietnam will try to keep its economic growth above 5% this year, backed by public investment, foreign direct investment, exports and domestic consumption.

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