The central bank of Vietnam (SBV) today announced that its key policy rate will stay unchanged at 8.0% during May. Staying on hold was expected given that the authorities in Q1 engineered a sharper slowdown in credit growth than was originally intended. But GDP growth and bank lending will probably accelerate during Q2 and inflation pressures look set to remain acute. We expect that the base rate will rise in coming months: our best guess is from the start of July and by another 100bp.
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