Southeast Asia Information Port (www.dnyxxg.com) – The Bank of Laos (PBOC) held its fourth Monetary Policy Committee meeting on November 20th, officially announcing a 0.5 percentage point reduction in the 7-day benchmark interest rate from 9% to 8.5% per annum. This move aims to address the internal and external pressures facing the domestic economy, maintain a moderate monetary environment, and contribute to macroeconomic stability.
The meeting was chaired by Ms. Bounkham Vorajith, Governor of the PBOC, and attended by the Vice Chairman of the PBOC, committee members, and representatives from relevant departments. Participants focused on reviewing the progress of the implementation of the resolutions from the third meeting and the operation of monetary policy tools throughout the year. They also reviewed reports on fiscal policy operations, external debt management, and the direction of macroeconomic management in 2026.
The committee noted that the Lao economy will continue to face multiple complex challenges in the first 10 months of 2025: a slowdown in global economic growth expectations, adjustments to policy interest rates by international and regional central banks, continued exchange rate volatility, and high foreign exchange demand due to external debt repayment. Domestically, the structural fragility of the economy remains unchanged, with insufficient liquidity and credit supply in the commercial banking system making it difficult to effectively support the production sector, and credit growth is expected to slow further. However, despite these pressures, inflation is projected to remain moderate in the fourth quarter of this year, with an average annual inflation rate of approximately 5%.
To strengthen monetary and financial stability, the meeting approved several supporting measures: clarifying the direction of the mixed monetary policy for 2026, further improving tools such as benchmark interest rates and required reserve ratios, and issuing short-term Kip bonds in conjunction with the economic situation; regarding exchange rate policy, maintaining the commercial banks' trading band of ±6.5%, while enhancing the flexibility of the daily reference exchange rate, and intervening promptly by closely monitoring exchange rate trends to maintain the value of the Kip and alleviate inflationary pressures.
At the policy implementation and oversight level, the committee decided to convene four thematic meetings in 2026, requiring relevant departments to report on progress in commodity price controls, tax and tariff reductions, and curbing informal transactions; reiterated the policy of centralized management of government deposit accounts, and instructed the central bank and the Ministry of Finance's technical departments to strengthen coordination and promote the next-day transfer (T+1) mechanism to ensure the timely flow of public funds; the central bank will continue to work with the Ministry of Finance to coordinate monetary and fiscal operations with commodity price management, dynamically update economic situation assessments, and ensure the consistency and effectiveness of policy measures.
This half-day meeting reached a broad consensus through constructive discussions, with all parties clarifying core measures to strengthen macroeconomic stability and support the country's development priorities for 2026, laying a policy foundation for Laos' economy to cope with challenges and achieve a steady recovery.
