HANOI: Vietnam's central bank raised its refinance and discount rates to 12 percent on Tuesday, March 8 as it battles some of Asia's highest inflation.
The rate hike is the third since Feb. 17 when the State Bank of Vietnam increased the refinance rate to 11 percent from 9 percent.
The decision meant a whopping 500-basis-point jump for the discount rate, which was last increased to 7 percent from 6 percent on Nov. 5, 2010.
The central bank also set at 12 percent two other rates, including one for electronic overnight interbank loans. It did not mention the base rate, which had previously been treated as the benchmark.
The announcement offered no explanation.
Annual inflation last month, reported by the government on Feb. 23, raced to a two-year high of 12.31 percent and prices rose 2.09 percent from January.
The government announced several steps in February to tighten monetary and fiscal conditions in a bid to bring down inflation, restore confidence in the currency and narrow trade and fiscal deficits.
The policy response Vietnam unveiled last month to tackle soaring inflation is appropriate but the authorities might have to lower their gross domestic product growth target, the Asian Development Bank said.
The state-run Vietnam Economic Times newspaper quoted Deputy Planning and Investment Minister Cao Viet Sinh on Tuesday as saying gross domestic product could expand at between 6.5 percent and 7.0 percent this year, below the government's annual target.
The Vietnamese government initially projected the country's gross domestic product (GDP) to rise between 7.0 percent and 7.5 percent this year, accelerating from 6.78 percent in 2010.
Many economists expect a strong rise in the consumer price index again this month as a result of double-digit increases in the retail prices of fuel and electricity. - Reuters
The rate hike is the third since Feb. 17 when the State Bank of Vietnam increased the refinance rate to 11 percent from 9 percent.
The decision meant a whopping 500-basis-point jump for the discount rate, which was last increased to 7 percent from 6 percent on Nov. 5, 2010.
The central bank also set at 12 percent two other rates, including one for electronic overnight interbank loans. It did not mention the base rate, which had previously been treated as the benchmark.
The announcement offered no explanation.
Annual inflation last month, reported by the government on Feb. 23, raced to a two-year high of 12.31 percent and prices rose 2.09 percent from January.
The government announced several steps in February to tighten monetary and fiscal conditions in a bid to bring down inflation, restore confidence in the currency and narrow trade and fiscal deficits.
The policy response Vietnam unveiled last month to tackle soaring inflation is appropriate but the authorities might have to lower their gross domestic product growth target, the Asian Development Bank said.
The state-run Vietnam Economic Times newspaper quoted Deputy Planning and Investment Minister Cao Viet Sinh on Tuesday as saying gross domestic product could expand at between 6.5 percent and 7.0 percent this year, below the government's annual target.
The Vietnamese government initially projected the country's gross domestic product (GDP) to rise between 7.0 percent and 7.5 percent this year, accelerating from 6.78 percent in 2010.
Many economists expect a strong rise in the consumer price index again this month as a result of double-digit increases in the retail prices of fuel and electricity. - Reuters
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