At the working session with the State Bank of Vietnam (SBV) on August 25, deputy prime minister, Vu Van Ninh, stated that the central bank’s key task in the remaining months of this year should be to continue with careful, close and flexible monetary policies.
In particular, the central bank should continue to use the flexibility and effectiveness of monetary policy tools to reduce inflationary pressures, gradually lower interest rates in accordance with the reduction of inflation.
To accomplish this goal, the central bank should regulate an appropriate amount of money supply, ensure credit growth at below 20 percent as well as the foreign currency liquidity and increase the national foreign exchange reserve.
Accordingly, first, the central bank will retain basic interest rates and consider reducing the interest rate with appropriate band in the case of deflation.
The deposit rate cap will be unchanged at 14 percent per year to create favourable conditions for credit institutions to lower the lending interest rate and the interest rate cap will be removed as long as conditions allows.
Currently, the central bank is applying the basic interest rate at 9 percent per annum (p.a.), rediscount interest rate at 13 percent p.a. and refinancing interest rate at 14 percent p.a.
Regarding the gold market, the central bank is building a gold price stabilisation plan in the short term to submit the government and another plan for the central bank to mobilise gold from the economy with a hope to increase the national forex reserve.
The central bank will also continue the target to curb inflation at one-digit in 2012 together with other goals such as total means of payment in 2012 will increase by 17-19 percent and credit growth at 18-21 percent against the end of 2011.
In the late four months of this year, the deputy prime minister Vu Van Ninh asked the central bank and other commercial banks in the banking system to be more flexibility in management to ensure the credit growth at 20 percent.