SBV Governor Nguyen Thi Hong (Photo: VNA)

Hanoi - Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong provided explanations regarding the high lending rates and credit room management during a plenary session of the 15th National Assembly’s ongoing fifth meeting in Hanoi on June 1.

Hong pointed out two reasons for high lending rates last year, including rapid and significant hikes in global interest rates while domestic inflation was higher than the same period of 2021. Moreover, there was a great pressure on the devaluation of the Vietnamese dong as countries tightened monetary policies and the US dollar experienced a strong appreciation.

At that time, the SBV saw the need to adopt flexible and synchronous solutions to address these difficulties and avoid currency devaluation, which would result in increased input costs and high inflation, she said, adding that when the exchange rates became stable again and inflation eased, the SBV made three adjustments to reduce lending rates by 0.9 per cent compared to 2021 in the early months this year.

When it comes to policy management, it is unadvisable to let guard down in the face of inflation, Hong noted.

With the recent fluctuations in the US banks, she said prioritising the safety of the banking system is a sound choice of the SBV and Government.

According to her, the SBV carefully considered the solutions and timing of its policies to achieve macroeconomic stability, ensure the safety of the banking system, and create a business environment conducive for enterprises and the public.