Laos’ central bank has decided to reduce its seven-day basic interest rate from 8.5 to eight per cent in a move to maintain monetary stability.

The decision was approved at the first Monetary Policy Committee meeting of 2026, held in Vientiane, according to a statement on Monday by the Bank of the Lao PDR.

The committee reviewed the performance of monetary policy tools and discussed future policy directions, noting continued global uncertainty that has fuelled volatility in fuel, energy, gold, and food prices.

It is expected to slow global economic growth.

Domestically, policymakers highlighted ongoing challenges, including a fragile economic base, strong demand for foreign currency to service external debt, exchange rate fluctuations, and credit growth that remains misaligned with structural economic goals.

However, coordinated measures are expected to help keep inflation at around five per cent.

To safeguard monetary stability, the committee endorsed key policy directions for 2026, including maintaining a managed float exchange rate regime and refining tools such as interest rates and reserve requirements.

Others are the issuance of short-term central bank bonds, alongside close monitoring of exchange rate movements to mitigate inflation risks. 

(Xinhua/NAN)