State Bank of Viet Nam's headquarters in Ha Noi. — Photo SBV

The State Bank of Viet Nam (SBV) has announced it would cut many key interest rates, starting from today, in an attempt to support the economy which has been hurt by the COVID-19 outbreak.

Accordingly, the refinancing rate has been reduced by 1 percentage point to 5 per cent while the discount rate has been lowered by half a percentage point to 3.5 per cent.

The overnight lending rate in the inter-bank market has been also adjusted down to 6 per cent from 7 per cent and the open-market-operation (OMO) rate, to 3.5 per cent from 4 per cent.

The central bank has also reduced the caps on the interest rate of Vietnamese dong-denominated deposits and loans by 0.25-0.5 percentage points, depending on the maturities.

The COVID-19 pandemic is evolving quickly, having a negative impact on the global economy, it said, citing the fact that to prevent recession, many foreign governments have adopted economic stimulus policies, one of which is policy rate cuts made by central banks. For example, the US Federal Reserve has slashed its interest rates sharply to 0-0.25 per cent to improve the market’s liquidity.

In a meeting last week, SBV Deputy Governor Dao Minh Tu said the reduction of the benchmark interest rate is a solution to help credit institutions with abundant liquidity, thus putting them in a better position to support affected businesses.

The central bank made the last interest rate cut by 0.25 percentage point in September last year. — VNS