Vietnam: SBV’s easing cycle over? – UOB

UOB Group’s Head of Research Suan Teck Kin, CFA, assessed the latest interest rate decision by the State Bank of Vietnam (SBV).

Key Quotes

“The State Bank of Vietnam (SBV) announced on 30 September a 50bps cut as we had expected, to its key policy rates, effective from today (Thursday, 1 October).”

“The SBV lowered refinancing rate from 4.5% to a new record low of 4.0%, rediscounting rate from 3.0% to historical low of 2.5%, overdraft rate from 5.5% to 5.0%, and VND short term loan rate for priority sectors from 5.0% to 4.5%.”

“With the refinancing rate now at a new record low of 4.0% and rediscounting rate at a historical low of 2.5%, the SBV is likely to be biased towards keeping the available interest rate buffer for real emergency situations and stay on a wait-and-see posture, just as the economy reopens further for business activities.”

“With SBV taking the latest rate cut step as we had expected, we anticipate no further policy rate reductions going forward, unless there is evidence that the GDP growth trajectory is at risk of being derailed.”