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Interest rates could rise 0.5-1% in 2017: BVSC

Update: January, 17/2017 - 15:00
Interest rates are forecast to rise by 0.5 to 1 per cent in 2017. - Photo vietbao.vn
Viet Nam News

HÀ NỘI – Interest rates are likely to rise by 0.5 to 1 per cent in 2017, the Bảo Việt Securities Company (BVSC) has forecast.

In a recently released report on prospects in 2017, the BVSC has given three reasons that will cause interest rates to rise. The first reason, according to BVSC analysts, is that credit growth is anticipated to remain high at 17 to 18 per cent in 2017 so as to support economic growth.

Secondly, inflation will be under rising pressure, which will be the basis for a nominal hike in interest rates.

Finally, the central bank will have to maintain a reasonable gap between interest rates of the đồng and the US dollar, which will put pressure to raise the đồng interest rate.

The BVSC has also predicted that the central bank will face significant challenges in managing the monetary policy in 2017 as a rebound of credit growth in 2016 will lead to a further rise in the next few years, putting pressure on interest rates and inflation.

According to BVSC, the Government has targeted a GDP growth of 6.5 to 7 per cent in the 2016-20 period so that pressure on the monetary market will be high. 

In the report, the BVSC also assessed in contrast to the sharp declining trend in 2015, interest rates in 2016 were relatively stable. After rising 0.2 to 0.3 per cent per year in the first quarter last year, the interest rate steadied from April, with some banks even cutting it by 0.3 to 0.5 per cent per year for deposits and 0.5 to 1 per cent per year for loans for production and business as well as prioritised industries in April and September.

By the end of 2016, the lending interest rate averaged around 6 to 9 per cent per year for short-term loans and 9 to 11 per cent per year for medium- and long-term loans.

Analysts with the BVSC assessed that the rebound in credit growth and a stable interest rate in 2016 significantly supported the country’s economic growth. - VNS

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