Vietnam's central bank cut its benchmark refinancing rate by 100 basis points to 8.0 percent, as expected, saying inflation was under control and at a low level but firms have faced with numerous difficulties in expanding their output and business.
The State Bank of Vietnam, which cut rates by 600 basis points in 2012, said its discount rate had also been cut to 6.0 percent from 7.0 percent along with the overnight rate in the interbank market, which has been cut to 9.0 percent from 10.0 percent.
Vietnam's consumer price inflation rate fell by 0.19 percent in March from February for an increase of 2.39 percent from the end of 2012, the central bank said.
It attributed the low rate of inflation to joint measures together with the government, ministries and agencies.
On an annual basis, Vietnam's inflation rate was steady at 7.02 percent in February from January's 7.07 percent.
The State Bank also said liquidity in the banking sector had improved while money markets, the exchange rate and inter-bank rates have been stable. International reserves have risen.
"However, production and business have faced with numerable difficulties due to the decline of the market’s purchasing power, and the limited absorption of banking capital resources for recreating and expanding production and business," the central bank said.
Last month Vu Duc Dam, head of the government office, told reporters that the central bank would cut interest rates and the level of bad debt in the banking system has been cut to 6 percent from 8.82 percent.
In 2012 Vietnam's economic growth eased to 5.03 percent from 2011's 5.9 percent.