Vietnam said Friday that it was reducing interest rates to the lowest level in more than three years -- the latest in a series of stimulus measures aimed at boosting the ailing economy.
The refinancing rate -- charged on loans to commercial banks -- will be lowered to seven percent from eight percent with effect from Monday, the central bank said on its website.
It is the eighth cut since March 2012, and leaves the rate at its lowest level since late 2009.
Another key monetary policy tool, the discount rate, will be cut to five percent from six percent, the State Bank of Vietnam (SBV) announced.
The communist-run nation is struggling to revitalise an economy hit by sluggish domestic demand, banking sector troubles, falling foreign direct investment and financial malaise among state-owned companies.
Firms are facing "numerous difficulties" such as weak demand and trouble obtaining bank loans, the SBV said.
Inflation slowed to the weakest pace in seven months in April, with consumer prices showing a year-on-year rise of 6.61 percent.
Gross domestic product (GDP) grew at its weakest pace in 13 years in 2012, with an expansion of 5.03 percent, according to government figures.
Vietnam repeatedly raised interest rates in 2011 to rein in double-digit inflation, with the refinancing rate peaking at 15 percent. But with the economy cooling, the authorities last year launched a new stimulus drive.