(Repeats to fix spelling in headline)
By John Ruwitch
HANOI, June 14 The Asian Development Bank sees a
bit of room left for policy rate hikes in Vietnam, but expects
monthly inflation to start to come down this month and
double-digit annual inflation to begin to ease in August.
Vietnam has been grappling with some of the highest
inflation in the world. It has ratcheted up key interest rates
since late last year and pledged a raft of other measures,
including lower credit and money supply growth and fiscal
Still, the consumer price index rose to 19.8 percent in May
from the same month last year.
"We expect that at least at the monthly level the inflation
rate will start coming down from this month," Ayumi Konishi, the
ADB's country representative in Vietnam, told reporters on
"The only thing is that last year the base numbers, monthly
inflation between April to August, were very low. So even the
slightest increase in the monthly rate will still keep pushing
the year-on-year inflation rate up until August."
Asked if there was scope for further interest rate hikes,
Konishi said: "Some of them I think can still be tightened a
little more, but not much."
"How far interest rates should really be tightened all
depends on how far the inflation rate, the inflation situation
will aggregate further," he said.
The State Bank of Vietnam has increased the
reverse-repurchase rate for seven-day open market operations by
800 basis points to 15 percent since November, and has also
lifted the refinance rate and discount rates by several hundred
basis points since February.
Inflation remains a problem, though, and analysts have been
calling for the government to be more aggressive in pursuing its
pledges to rein in state spending.
"Monetary policy alone cannot solve the problem. That's for
sure," Konishi said.
"So the combination of fiscal measures I think is
important... On the fiscal side I think the effort has got to be
The International Monetary Fund last week delivered a
similar message at a meeting of donors and the Vietnamese
government, saying further policy rate hikes could be necessary
and authorities should enhance fiscal support for the monetary
tightening already under way.
Central bank deputy governor Nguyen Van Binh said the State
Bank of Vietnam must raise rates further if "very high"
(Reporting by John Ruwitch; Editing by Richard Borsuk)