HANOI: Vietnam’s central bank on Tuesday cut its key interest rates for the first time in nearly a year in an attempt to kick-start the nation’s sluggish economy.
The State Bank of Vietnam cut the refinancing rate—charged on loans to commercial banks—to 6.5 percent from seven percent.
The discount rate was also trimmed to 4.5 percent from five percent.
The cuts, which come into effect on Tuesday, aim to encourage more lending to businesses to stimulate growth, according to a report posted on the bank’s website.
The communist nation is struggling to revitalize an economy hit by slow domestic demand, banking sector troubles, falling foreign direct investment and financial malaise among state-owned companies.
Vietnam last cut rates in May 2013, taking them to their lowest level since late 2009.
In 2013, Vietnam’s inflation slowed to 6.04 percent, down from the previous year’s 6.81 percent.
Economic growth was reported at 5.43 percent in 2013, picking up speed slightly after its worst performance in more than a decade in 2012, when GDP grew just 5.03 percent.
The country is this year targeting growth of 5.8 percent.