Problem "inflation - interest rates": vicious not see the exit

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Problem "inflation - interest rates": vicious not see the exit

Post by mrsngtra on Sun Jul 03, 2011 2:11 pm

When the information the government continues to adjust the inflation rate to a maximum of 17% this year, a small business owner specializing in large billboards advertising sad stale: "So far from reducing interest is ".

Tired old standby rates go down

As a small business, working capital is mainly dependent on the bank, he is very concerned about inflation, because inflation only when the heat is soothing new interest may have decreased.

Through monitoring the CPI growth rate in April, 5, 6 respectively: 3.32%, 2.21% and 1.09%, Mr. Employees banks are lending relationships with 22% / VietBank year, will reduce interest Indovinabank yourself. But now, single control to adjust the target rate of CPI increase to 17% has become an obsession with going to the public interest is charged.

In respect of consumer loans, in addition to the stringent of the record, even more terrible interest.

Recently, Prudential Financial companies offer rate 27.5% / year, average interest rate to 2.29% / month. For example, if the borrower about 100 million, 48-month period, the end of term loan, both principal and debt to over 166 million!

Specifically, to reach success with loans above 100 million, average per month, customers pay about 3.46 million, including principal and interest. In the first month, the company based on the outstanding principal and interest payable is 100 million x 1 month x 2.29% = 2.29 million, while the principals are: 3.46 million - 2, 29 million = 1.17 million; plus principal and interest during the first month is 3.46 million.

Thus, at the end of the first month, the customer's existing principal remaining: 100 million - 1.17 million = 98.83 million. By 2 months, the interest is as follows: 98.83 million x 1 month x 2.29% = 2.263 million. However, in this month than last month, if interest is slightly reduced principal payment increases, including: 3.46 million - 2.263 million = 1.197 million.

So on, until the final settlement of the contract (48 months), the amount the borrower must pay the company over 166 million.

There is a strange story: while a market interest, from production to consumption loans in the roof, the two markets are quite peaceful from liquidity, interest to capital supply and demand; although SB countries and commercial bank providing capital markets are very strong withdrawal during this time.

Officials and business capital of a bank, said in May 6 / 2011, market interest rates decline compared to January 2 5 / 2011 from 3% to 4% for the term "overnight", a month. Currently, the overnight interest rate at around 11% - 12% / year, 1 week and 2 weeks from 13% - 13.5% / year for 3 weeks - a month from 14% - 15% / year. And if compared to market rates, the market interest rate first 2 are much lower.

Through our research, it turns out, the requirements of Circular 13 and other provisions, the State Bank has achieved the goal of a stable liquidity and capital available to banks but to create an inadequate the other is the continuity between the two markets 1 and 2 are interrupted. Therefore, appear two different extremes of the market in a fire when capital markets, interest rates on loans and the market two changes to the opposite. It seems that, between these two markets is lack of "split fire" very necessary.

The staff said: "But that's not the main reason for a difficult market interest rates down but a very important factor is the galloping rate of inflation."

Difficult to remove bottlenecks

Prior information government says the inflation rate to target a maximum 17%, many economists have proved adept surprise.

Le Xuan Nghia, Vice President Financial Supervision Commission National explains: "It's just redundant targets only, not to miss out last year achieved 15% target is also the basis for explaining! ".

But financial experts Nguyen Dai Lai commented that: "Under pressure from many sides, to ease the inflation target is difficult to avoid. With the investment policy of the state spread almost scatter grain for chicken feed, is one of the main cause of inflation. Meanwhile, the interest rate tends to back away from the ocean, does not flow into the banking system, the new interest rate is far lower temperatures. "

According to Lai, the Government is now very confused problem of inflation and interest rates. Because if continued strong money supply growth rate of inflation is more terrible than another, while if the interest rate tightening will continue at high prices even higher. "The monetary tightening rather than to relax in the meantime, the Government should review and reduce investment in the public sector more, because of the residual field of monetary policy to deal with inflation is coming much, "Mr. Lai said.

In relation to the circular cut public investment, there is a very disturbed information is the reduction of public investment to 25 trillion is a "virtual".

At the meeting of the National Assembly on 30 / 6, the Committee for Economic Ha Van Hien said that figure to cut public investment to the extent not actually 80,500 billion as the Government has announced. According to Hien, in public statements, has 15 trillion to cut bonds and 10 trillion cut due to the advance of capital for projects in 2012 is not accurate.

Because, first, the bonds that Congress approved for 2011 is 45 trillion, if the government cut 15 trillion must be compared with figures, not comparable to landmark agreement implementation of 2010. Performance level government bonds in 2010 was 60 trillion. If this is the argument of Mr. Hien, the bonds have not been any money down?

Monday, the Ministry of Planning and Investment also announced cuts of 10 trillion capital advanced for the real work of 2012, the beginning of the year, Congress did not approve any contract for this clause.

Many experts warn, to reduce the CPI growth rate will need to tighten fiscal stronger, but watch out, between the promise and the number is still distant.

While inflation is not reduced but more extended targets, the desire to reduce the interest rate is not known ever to reality. And so, the problem is "inflation - interest rates" vicious still have not found a way out.


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