OMO rates cut to support growth

The move is aimed at supporting economic growth as it will contribute to reducing the cost of funding for commercial banks, thereby helping them cut lending rates for domestic firms. Accordingly, OMO rates were lowered by 25 basis points to 4.75 per cent per annum. The last cut was made in March 2014 when the rate was trimmed by 50 basis points to 5 per cent. Previously, at a meeting of the banking industry last week, Governor of SBV Le Minh Hung also said that after the meeting, the central bank would issue Resolution 01 on implementing tasks of the banking sector in 2018, in which it would instruct credit institutions to consider a rate cut for lending interest. He said the central bank would also cut the lending rate in the OMO (open market operations) market to aid institutions. According to experts, the move will have positive impacts on the monetary market, especially when capital demand is rising significantly to meet consumption and payments given the approaching Lunar New Year. Some commercial banks such as Vietcombank, Agribank and Vietinbank have also announced reductions in their lending interest rates over the past few days, as instructed by the central bank, to spur economic growth. Accordingly, interest rates for short-term dong loans will be lowered to 6 per cent per year. Apart from new loans taken this year, the rate would also apply to existing loans with interest rates higher than 6 per cent in five priority sectors of agriculture businesses,… [Read full story]

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