Vietnam rate hike to help cut inflation: economist

HANOI — Economists on Friday welcomed a larger than expected rise in a key Vietnamese interest rate as part of efforts to curb rising prices, but said that more needs to be done to boost the economy.

The State Bank of Vietnam announced on Thursday that its refinancing rate would rise from nine to 11 percent, but left two other measures, the base and discount rates, unchanged at nine and seven percent respectively.

It followed a currency devaluation last week—the fourth in 15 months—as the government struggles to address a complicated mix of problems including a huge trade deficit and high inflation.

Analysis from Capital Economics consultancy suggested the move, which was larger than predicted, would dampen domestic demand and “help to stop the economy from overheating”.

“It appears that policymakers are finally getting serious about addressing the challenges facing the economy. Another necessary step will be to reduce the budget deficit and curb the rise in government debt,” the statement said.

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