Lending interest rates cannot fall now as CPI could quicken again when consumption demand rises at the year-end, Cao Sy Kiem, the former Governor told the local newspaper Tuoi Tre (Youth).

"We should focus on reducing deposit interest rates first and then cutting lending rates" said Kiem who  is currently also a member of the National Advisory Council for Financial and Monetary Policies

Kiem pointed out that interest rate caps are driven by inflation.

Regarding to the opinion that the State Bank of Vietnam should inject liquidity for cash-thirsty banks Kiem believed that SBV should be caution pumping money now when inflation has not yet fallen considerably and the monetary policy cannot be easing with single-digit inflation target for 2012.

The central bank is mulling over the timing, magnitude and how to implement the plan  of trimming interest rates, Kiem said.

Source StoxPlus