ADB sees room for Vietnam interest rate hike

Jun 14, 2011. 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 tightening.

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 Tuesday.

“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.

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