Vietnam deputy PM calls for deeper lending rate cuts to boost business

Vietnam's Deputy Prime Minister has called for substantial lending rate reductions of 1.5 to 2 percentage points across the banking sector to provide relief for businesses and priority industries facing economic headwinds. The directive underscores the government's commitment to proactive monetary management aimed at stimulating economic activity while preserving price stability and broader financial equilibrium. Vietnamese banks have already begun responding to policy signals, cutting both deposit and lending rates in recent months as part of broader efforts to support the economy. The State Bank of Vietnam has also raised the short-term capital lending cap to 40 percent, providing additional liquidity to the system. Banks are increasingly shifting toward cash-flow based lending models designed to unlock capital for small and medium-sized enterprises, which form the backbone of Vietnam's private sector. Policymakers emphasize that monetary policy adjustments must be carefully coordinated with fiscal measures and other macroeconomic tools to ensure inflation remains under control while supporting sustainable growth and maintaining key economic balances.