The State Bank of Vietnam (SBV) on September 30 announced its decision to lower the benchmark interest rate as part of efforts to support the national economy amid difficulties posed by the COVID-19 pandemic.

From October 1, the refinancing interest rate will be cut to 4% per annum from 4.5%, while the rediscount interest rate will go down to 2.5% from 3%.

The overnight electronic interbank rate and rate of loans to offset capital shortage in clearance between the SBV and credit institutions will be lowered to 5% per annum from 5.5%.

The central bank also decided to cut the interest rate of bids of valuable papers through open market operations from 3% per annum to 2.5%.

Regarding the maximum interest rate for deposits in Vietnam dong (VND) by organisations and individuals at credit institutions and foreign bank branches, the SBV stipulates that the maximum interest rate applicable to demand deposits and those of less than one month is 0.2% per annum.

The maximum interest rate applicable to deposits with terms from one month to less than six months will fall to 4% per annum from 4.25%.

The maximum rate for deposits with terms of one month to less than six months at people’s credit funds and microfinance institutions will be cut to 4.5% per annum from 4.75%, while interest rates on deposits with a term of six months or more will be determined by credit institutions on the basis of market capital supply and demand.

Notably, loans to borrowers in a number of regulated fields and economic sectors have been cut to 4.5% per annum from 5%. The maximum short-term lending interest rate in VND at people’s credit funds and microfinance organisations for these capital needs is now down from 6% per annum to 5.5%.

According to the central bank, since early this year it has synchronously operated monetary policy tools to control inflation, stabilise the macro-economy and the monetary market, and reduce the market interest rate to support economic recovery amid the COVID-19 pandemic.