Vietnam raises key rates again as inflation worsens

HANOI, Apr 30 (AFP): Vietnam Friday announced fresh hikes to key interest rates as it battles to tame the country's worsening inflation, the highest in Southeast Asia. The refinancing rate will rise to 14 per cent beginning Sunday, up from 13 per cent, while the discount rate will change from 12 to 13 per cent, the State Bank of Vietnam (SBV) said on its website. No reason was given but Vishnu Varathan, Asia economist at Capital Economics in Singapore, told AFP the bank had to act after official estimates put April's inflation figure at 17.51 per cent compared with the same month last year. "I think that was quite a knock. SBV has had to react to show that it is still on top of the situation," he said. Since a series of rate hikes began in mid-February, the refinancing rate has climbed from nine per cent and the discount rate has increased from seven per cent. Higher refinancing rates increase the cost for commercial banks that borrow from the SBV to supplement their capital. The discount rate applies to more urgent borrowing. Throughout the series of rate hikes, the base rate has remained unchanged at nine per cent. The government, which has said fighting inflation is its number-one priority, said prices rose 3.32 per cent in April from March, the highest monthly increase in three years.