HANOI Aug 26 Vietnam's central bank should hold
policy rates for now and deploy monetary tools "flexibly" the
rest of 2011 to trim price pressures, but it needs to try to
lower interest rates as inflation eases, Deputy Prime Minister
Vu Van Ninh said.
His views were reported on official websites on Friday, the
day after Ninh met senior central bank officials and two days
after the government announced that annual inflation hit 23
percent in August.
High inflation is one of Vietnam's biggest economic
problems. August was the 12th consecutive month in which the
annual inflation rate rose.
Separately, an editorial on Friday in the ruling Communist
Party's mouthpiece newspaper, Nhan Dan, said now was not the
time for Vietnam to loosen monetary policy.
Economists say inflation momentum has begun to ease and the
level may have reached a peak.
Ninh, a former finance minister, was quoted by the
government website as saying policy rates should be unchanged
A statement on the State Bank of Vietnam (SBV) website
quoted Ninh as saying the central bank should "continue to use
monetary tools flexibly and effectively to decrease inflationary
pressures and lower interest rates gradually in line with
changes in the inflation rate.
Paraphrasing Ninh, it said one of the central bank's most
important tasks the rest of 2001 is "to continue to manage
monetary policy in a way that is flexible, prudent and
TO STRIVE FOR SINGLE-DIGIT INFLATION
An account of Thursday's meeting on the government website
quoted new State Bank Governor Nguyen Van Binh as saying the
central bank would strive for single-digit inflation next year.
The Asian Development Bank in April said its projection for
inflation in Vietnam next year was 6.8 percent. In June, the
International Monetary Fund said it expected CPI to be 6.2
percent at the end of 2012.
Analysts say pressure will undoubtedly rise on the
government to lower interest rates as inflation turns a corner
because companies and banks have already been vocal about the
difficulties they are facing with soaring interest rates.
Binh reiterated his pledge to try to bring commercial
lending rates down, a move that some economists say is likely to
The central bank raised the refinance rate five times
between November last year and this May, to 14 percent from 8
percent. The reverse repurchase rate for 7-day open-market
operations was hiked to 15 percent from 7 percent in the same
period. In July it lowered the OMO rate to 14 percent.
The newspaper Nhan Dan said policymakers should stick with
their monetary policy choices.
"This is the time when these monetary policies are starting
to bear fruit," it said.
"Monetary policy should not be loosened, and if it is
loosened then inflation will return," it said in the front-page
(Additional reporting by Ho Binh Minh; Editing by Richard