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Saturday, July 27, 2024

Central Bank of Laos Puts Mechanisms in Place to Control Inflation

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The Bank of the Lao PDR has implemented various measures to manage high rates of inflation in the country, including increasing interest rates and issuing saving bonds, according to Mr. Soulysak Thamnuvong, Head of the Department of Monetary Policy at the Central Bank.

Mr. Soulysak said that inflation remains a key concern for central banks around the world, and the Bank of the Lao PDR is no exception.

To control inflation rates, he revealed that the bank has increased interest rates on deposits from 3 percent to 7.5 percent per annum, signaling commercial banks to follow suit.

In addition to this, the Bank of Laos has issued two tranches of saving bonds. The first was worth LAK 8 trillion, which sold out in hours, and a further LAK 2 trillion was approved by the government as well.

Mr. Soulysak explained that when high inflation becomes an issue, the bank issues bonds as a tool for controlling the amount of money in circulation. These bonds have a short maturity of three to six months and help “suck money out of the system,” thus reducing inflation.

According to him, the success of the savings bonds has led to increased public confidence, with the first round of bonds carrying a 20 percent annual interest rate and the second having 15 percent.

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