While disagreements are common between elected leaders and central bankers, they’re unusual in one-party, Communist-run nations. When they do happen, it’s usually the sign of a power struggle.
That appears to be the case now in Vietnam, which is suffering from an economic slump that will likely see it miss its full-year 6.5% gross domestic product growth target. Although anything close to that would be the envy of many emerging markets, a failure to hit the goal could be career-damaging for Prime Minister Pham Minh Chinh, according to people familiar with the situation.
Chinh, 64, ordered government agencies this month to speed up public investment in a bid to accelerate growth to 9% in the second half of the year. He’s been urging the State Bank of Vietnam to ease access to loans and lower policy interest rates for a fifth time this year. The latter demand prompted a deputy governor to retort that rate cuts aren’t a "magic wand” — a rare pushback in a nation where the central bank chief is effectively a cabinet member who reports to the prime minister.
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