According to Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh, since August this year, the consumer price index (CPI) has declined. He hoped that if CPI rises remained below 1% in the last two months of this year, it would allow a reduction in interest rates.

Since August, the SBV has instructed commercial banks to cap deposit interest rates at 14% and cut lending rates to an average level of 16-18% per year.

Binh noted that lending interest rates for rural, agricultural and export sectors are now at 17-19%. The rates for other sectors stand at 18-21%, 1-2% lower than the rates in late August.

The Governor said Vietnam targeted to keep inflation rate of 18-18.5% this year. Bank loans grew by more than 10% so far this year and annual credit growth for 2011 remain at between 12-13%.

Next year, the SVB will prioritise loans for development of agriculture and rural areas, production for export, development of support industries and the operation of small and medium-sized enterprises.

The SBV will also issue more specific lending regulations on non-manufacturing sectors and reconsider mortgage requests for low and middle-income people who have real demand, along with social housing projects.