SBV should inject more money in the market: bankers

The interest rate market is witnessing cool-down signals. At this moment, the dong deposit interest rate has decreased by 1-2% from three months earlier, pulling down the dong lending rate.
Analysts said that the credit growth in the first seven months of this year was only 12.97% against this year’s target of 20% and the total means of payments of the economy increased 3.57% compared to the year’s plan of 16%. These factors are creating favourable conditions for interest rates to go down.

However, leaders of many banks said that banks can not make further reductions of interest rates if the State Bank of Vietnam (SBV) does not have loosening monetary policy.

Specifically, the central bank should increase the money supply through the open market operations (OMO), at the same time lower the central bank’s lending interest rate from currently 14-15% per annum (p.a.) to 12% p.a. whereby pulling down the lending interest rate.

Le Tham Duong, dean of the Business Administration Faculty of HCM City Banking University said that the current monetary policy does not increase the inflation.

Duong said the credit growth line left is up to 12%, therefore the central bank can strongly pump more money for credit growth at 5% so that the actual deposit interest rate is stable at 14% per year, at the same time, the capital should be injected for right purposes whereby lowering the lending interest rate.

Previously, SBV’s governor, Nguyen Van Binh said the monetary policy is not a tightening, but it is close to ensure for a suitable inflation and economic growth. The central bank will soon issue a series of policies from late September, 2011 to bring the lending interest rate down to 17-19% per year. – Vietbiz24

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial