State Bank: Continuing to implement the policy of reducing interest rates is extremely difficult

ANTD.VN - The State Bank believes that implementing the policy of continuing to reduce interest rates in the coming time will be very difficult, because the interest rate level has decreased deeply, while credit demand is on an upward trend, and exchange rate pressure is great.

In the report of the Governor of the State Bank recently sent to the National Assembly delegates, the State Bank (SBV) said that recently, this agency has flexibly managed interest rates, implementing the policy of reducing the lending interest rate level.

In the first 10 months of 2024, the SBV will maintain the operating interest rate to facilitate credit institutions (CIs) to access capital from the SBV at low costs to contribute to supporting the economy . At the same time, the SBV will continue to direct CIs to reduce operating costs to reduce lending interest rates; report and publicly announce the average lending interest rate, the difference between average deposit and lending interest rates as well as information on lending interest rates of credit packages, programs, and products on the CIs' websites to provide information for customers to refer to when accessing loans.

Monetary policy management still faces many pressures

Regarding exchange rate management, although the world financial market has many fluctuations, the USD/VND exchange rate has basically moved flexibly, in accordance with market conditions, the foreign exchange market has remained stable, and market liquidity has been smooth.

At some stages, the currencies of many countries in the region fluctuated strongly under pressure from the world financial market, but the depreciation of VND against USD was appropriate and relatively stable compared to the general trend of currencies.

Regarding credit growth, in 2024, the State Bank targets credit growth at around 15%, with appropriate adjustments based on developments and actual situations. By October 31, 2024, credit will increase by 10.08% compared to the end of 2023, and by 16.65% compared to the same period in 2023.

However, in the coming time, the State Bank believes that monetary policy management will still face many pressures.

In particular, the inflation reduction is not sustainable and has the potential risk of increasing pressure in the context of the large openness of Vietnam's economy, complicated fluctuations in world commodity prices due to the impact of complicated geopolitical developments, the increasing trend of food security in countries, extreme weather...

According to the State Bank of Vietnam, implementing the policy of continuing to reduce interest rates in the coming time is very difficult. The reason is that lending interest rates have tended to decrease sharply in recent times (in 2023, they decreased by more than 2.5%/year and as of October 20, 2024, they continued to decrease by 0.76%/year compared to the end of 2023).

Along with that, the demand for credit capital is tending to continue to increase, in the coming time there will be pressure on the interest rate level; Exchange rate pressure from the international market makes the reduction of domestic VND interest rates increase the pressure on the exchange rate and the domestic foreign exchange market.

Another pressure on monetary policy is that the capital supply pressure of the credit institution system for the economy is still large, including medium and long-term capital in the context of capital mobilization from the corporate bond and securities markets facing many difficulties. This poses a great risk of maturity and liquidity for the banking system (short-term mobilization for medium and long-term lending).

Meanwhile, the credit absorption capacity of businesses and people is still low. After being affected by the Covid-19 pandemic, many businesses have reduced or stopped production due to lack of orders, dissolved, closed down, and their financial health has declined; at the same time, the trend of tightening and cutting spending by people has led to low credit demand;

Some customer groups have credit needs but have not met the loan conditions or have not been able to disburse loans due to problems with project legal procedures, declining financial capacity, cash flow imbalance, lack of feasible production and business plans, etc.

The State Bank of Vietnam said that with these difficulties and challenges, international organizations such as the IMF, WB, and AMRO all assessed that Vietnam's room for loosening monetary policy is currently very limited and recommended that Vietnam should take advantage of the remaining fiscal space to support economic growth.

Source: https://www.anninhthudo.vn/ngan-hang-nha-nuoc-viec-tiep-tuc-thuc-dien-chinh-sach-giam-lai-suat-la-het-suc-kho-khan-post594978.antd