Hanoi (VNA)꧂ – There is still room to cut the policy interest rates by 0.5-1 percentage point in the third quarter, making them approach the levels before the strong rise in October last year, according to experts.

Although deposit and lending interest rates have been continuously reduced since the beginning of the year, experts still believe that currently, high interest rates are causing difficulties for businesses.

The Government has delivered financial and interest-rate support packages, but the support was still not enough to remove difficulties for people and businesses.

Meanwhile, controlled domestic inflation, relatively stable exchange rates, and the end of interest rate hikes by the US Federal Reserve (FED) are seen as favourable conditions for further policy interest rate cuts.

🤡 The Viet Dragon Securities (VDSC) said that currently, the basic policy interest rates have decreased by about 1 percentage point on average compared to the beginning of the year. From the perspective of prudent monetary policy management, the room for further reducing the rates is limited when looking at the USD-VND interest rate.

However, if seeing monetary policy as a "rescuer" for the domestic economic situation, VDSC believed that there is still a possibility of another interest rate reduction of 0.5-1 percentage point in the third quarter, making the rates back to the levels before the sharp increase in October last year. "This means that the State Bank of Vietnam (SBV) has to boldly move one step further, using the tool of policy interest rates to force the interest rate level in the economy to fall further,” the broker said, expecting the move to be more decisive, with higher trade-offs, and possibly better spillover effects than previous cuts this year. Experts of Maybank Securities Limited also expected that in the next three months, there will be another policy interest rate cut, with an additional reduction of 0.5-1 percentage point for refinancing interest rate, discount rate, and ceiling interest rate for deposits from one to six months. The economic growth is likely to be significantly lower than the 6.5% target set by the Government this year. Sharing the views, Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, said that Vietnam still has room to continue reducing policy interest rates. "Firstly, we don’t need to be too worried that inflation will increase because demand is still very weak. Secondly, in the world, inflation is cooling down and the exchange rate is relatively stable. In addition, to support businesses and people to overcome difficulties and challenges this year, it is neccesary to cut interest rates to support businesses and people and stimulate credit, investment, and consumption,” Luc said. The banking industry has reduced policy and deposit interest rates three times since the beginning of the year, banks have also continuously adjusted down their interest rates. However, experts said that interest rates are still high and all expected the lending interest rates to decrease, otherwise, the policy interest rate cuts will not generate practical impacts. Meanwhile, many businesses are experiencing challenges such as rising production costs, declining orders, rising input material prices, and rising electricity prices. Therefore, their biggest desire now is that credit institutions will create favourable conditions for them to access loans, and reduce lending interest rates to create new growth engines. According to financial experts, after being cut, policy interest rates are quite consistent with the current inflation situation and the exchange rate pressure is not too great. However, it will take about one to two months for banks to mobilise enough deposits at low interest rates, then they can lower lending rates.

SBV Deputy Governor Pham Thanh Ha said that in the past week, the central bank has worked with commercial banks on further reducing interest rates to support businesses and the economy. Credit institutions have been taking measures to reduce lending interest rates.

♉ Besides the State-owned banks, many private joint stock commercial banks have agreed to reduce lending rates by 0.3-0.5 percentage points for existing customers.

The Deputy Governor added that in the coming time, the SBV will continue to closely monitor domestic and international monetary developments, and forecasts on inflation and market interest rates to adjust interest rates in line with the macro balance, inflation and interest rates, and monetary policy objectives. Then, it will have solutions to encourage credit institutions to reduce costs for further reduction of lending interest rates./.