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Vietnam central bank plans to cut policy rates to support growth

HANOI, March 14 (Xinhua) -- The State Bank of Vietnam on Tuesday said it would cut its policy rates by 100 basis points from Wednesday to address the liquidity problem for households and businesses.

The discount rate will be cut to 3.5 percent from 4.5 percent, the interbank overnight lending rate to 6 percent from 7 percent, while the refinancing rate will be kept unchanged at 6 percent, the central bank said in a statement posted on its website.

The central bank will also cap bank dong loan rates at 5 percent, down from 5.5 percent.

The move is part of the government's effort to "disentangle difficulties that have arisen in the economy, cutting lending rates for businesses and households", the central bank said.

The central bank's last cut of the rates was in 2020 to support the economy through the COVID-19 pandemic.

Last year, as Vietnam was faced with upward pressure on inflation and downward pressure on its currency, the central bank, taking similar steps by policy makers around the world, raised policy rates in September and widened the exchange rate trading band in October.

Vietnam will try to keep its economic growth at 6.5 percent this year, backed by public investment, foreign direct investment, exports and domestic consumption.

Consumer price index in February rose 4.31 percent from a year ago and 0.97 percent higher than the end of last year, the government is striving for the targeted 4.5 percent for the year.