Further interest rate cut may be soon: central bank deputy governor

Tu said the central bank's observation showed unutilised capital in the market and therefore, measures have been taken to encourage commercial banks to grant additional loans at lower rates to businesses.

"The central bank plans to further bring down interest rates to create a ripple effect, which will result in commercial banks lowering their rates. This, however, will depend on each bank's financial capacity," he added.

The deputy governor said the central bank's top priorities this year are keeping up the VND value, stabilising inflation and foreign exchange rates.

According to Tu, further cutting interest rates will likely prove to be a challenging task, as made evident by rising interest rates in many economies around the world but Vietnam is committed to supporting domestic businesses and consumers.

In addition, he said the central bank supported granting businesses additional time on their loans. Loan extensions, however, cannot apply to all businesses to ensure the financial system's stability.

Earlier in March, SBV had cut interest rates by 1 percentage point, marking the first time the central bank cut rates in the last two years.

Le Quang Chung, deputy director general of Smart Invest Securities, a stock company based in Hanoi, said SBV's timely response has resulted in a positive impact on the financial market and lower interest rates among commercial banks.

KienlongBank launched preferential loan packages worth VND5,000 billion for corporate and individual customers. Accordingly, the preferential interest rate is reduced by up to 2% per year.

HDBank has introduced a credit package worth VND30,000 billion, reducing interest rates by 1.5-2% per year compared to normal loans for businesses. VIB has also started a credit package with a maximum interest reduction of 2% per year for individual customers and micro businesses, applicable to customers using account packages of the bank.

Techcombank has applied a new base interest rate of around 9.4% to 9.85% per year for individual customers. The reference interest rate applied to loans was also set at 11.55% per year. At SHB, the base interest rate for individual and corporate customers applied from March 22 also fluctuates between 10.7-11.95% per year.

Economists said further rate cuts will depend on how well the country manages inflation with a possible announcement as soon as May from the central bank.