UOB Group’s Head of Research Suan Teck Kin, CFA, suggested the State Bank of Vietnam (SBV) is not done yet regarding further monetary easing.
Key Quotes
“The State Bank of Vietnam announced on 12 May 2020 the second round of rate cuts for the year. The SBV lowered refinancing rate from 5.0% to 4.5%, the rediscounting rate from 3.5% to 3.0%, and the overnight rate from 6.0% to 5.5% (for the inter-bank electronic payments and the rate of loans to finance short-term balances in the clearing transactions between the SBV and the commercial banks).”
“The latest rate cuts and other support packages are aimed at supporting the country’s reopening, after reporting no new COVID-19 cases for 27 consecutive days (as of Wed, 13 May) and no community transmission. Vietnam has been one of the more successful examples in containing the COVID-19 pandemic, reporting a total of just 288 confirmed cases, with no fatality, for a population of 100 million.”
“The pace of rate cuts has slowed somewhat, but with downside risks and uncertainty to the domestic economy remaining ahead and inflation rate running well below target, the SBV has room to cut if necessary. However, it is likely to adopt a wait-and-see approach for now given that interest rates are already at or near historic low.”
Share
