Central Bank to Keep Benchmark Interest Rate at 8 Percent in January

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HANOI, Dec. 29 – Vietnam’s central bank will keep the benchmark interest rate at a one-year high of 8 percent in January to help strengthen the economy.

The central bank increased the base rate to 8 percent last month amid signs of increasing inflation, after holding it at 7 percent for 10 months to revive the economy. The government also subsidized corporate borrowing and reduced tax payments to boost the country’s gross domestic product.

“The central bank may want to keep rates unchanged because it doesn’t want to add to costs for companies, especially because the loan subsidy program has been pared back,” said Duong Thu Huong, Hanoi-based general secretary of the Vietnam Banks Association and a former deputy governor of the central bank, according to Thanh Nien News.

Hanoi has been struggling with finding a balance between boosting economic growth and easing inflation, Prime Minister Nguyen Tan Dung told bankers at a conference on December 23.

According to a statement on the bank’s web site on Friday, policy makers will also keep the refinancing rate at 8 percent and maintain the discount rate at 6 percent.

Average inflation has stayed below 7 percent this year. The consumer price index rose 6.5 percent in December, the fastest pace since April, the General Statistics Office said yesterday.