Vietnam cuts key interest rates: central bank

Vietnam cuts key interest rates: central bank

Vietnam's central bank said it will trim key interest rates from Sunday, its fifth cut so far this year as inflation cools amid signs of weakening economic growth.

The State Bank of Vietnam said it would lower the refinancing rate -- charged on loans to commercial banks -- to 10 percent from 11 percent.

Other measures include lowering the discount rate from nine percent to eight percent, and the overnight inter-bank lending rate to 11 percent from 12 percent, the bank said in a statement posted on its website following the decision on Friday.

This is the fifth time this year the central bank has cut rates, following similar reductions in March, April, May and June.

By repeatedly hiking rates last year, Vietnam successfully reined in double-digit inflation, which peaked at 23 percent last August but was down to 6.9 percent year-on-year in June, its lowest rate in three years.

Standard & Poor's revised Vietnam's outlook to stable from negative last month, citing the government's successful fiscal tightening measures.

Vietnam's economic growth slowed to 4.38 percent in the first half of 2012, its most sluggish rate for three years, according to figures released Friday.

The figure lags a government target of 6 to 6.5 percent growth for the whole of 2012.
Vietnam posted a record 8.4 percent growth in 2005 but economic expansion has edged down since with businesses struggling to combat high inflation and a weak currency.

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