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Key Points

The Lao Central Bank has cut its key interest rate from 9.5% to 9%, marking the third reduction this year. This move comes as inflation continues to ease, dropping significantly from May to July. The decision is designed to reduce financial pressure on businesses and households while stimulating economic activity. However, the bank remains cautious about global economic uncertainties and fluctuating commodity prices.

Key Points: Laos Central Bank Cuts Interest Rate to 9% to Boost Growth

  • Third interest rate cut in 2025 following previous reductions in March and June
  • Inflation dropped sharply from 8.3% in May to 5.3% in July
  • BOL warns of risks from global uncertainties and oil price fluctuations
  • Rate cut aims to stimulate domestic spending and business investment
2 min read

Laos reduces interest rate to boost growth

Laos lowers interest rates for the third time in 2025, reducing from 9.5% to 9% to stimulate economic growth as inflation drops to 5.3% in July.

"The decision aims to lower financial pressure, make borrowing more affordable, and boost domestic spending and investment - Bank of the Lao PDR"

Vientiane, Aug 22

The Lao Central Bank announced Friday to lower its seven-day basic interest rate from 9.5 per cent to 9 per cent, offering relief to businesses and households while stimulating economic growth as inflation continues to ease.

This marks the third reduction in 2025, following cuts from 10.5 per cent to 10 per cent in March and to 9.5 per cent in June, according to the announcement of the Bank of the Lao PDR (BOL), Xinhua News Agency reported.

The decision aims to lower financial pressure, make borrowing more affordable, and boost domestic spending and investment, it said.

The interest rate cut follows a sharp decline in inflation, which dropped from 8.3 per cent in May to 5.3 per cent in July, after averaging over 10 per cent in the first half of 2025. This marks a notable recovery from 2023 when inflation hit 40.3 per cent, following the Covid-19 pandemic and rising fuel and food costs.

Despite the positive outlook, the BOL warned that risks such as global economic uncertainties, fluctuating oil and gold prices, and potential shifts in US interest rates remain.

On August 14, Lao officials and stakeholders convened to review the implementation of the Poverty Reduction through Safe Migration, Skills Development, and Enhanced Job Placement (PROMISE) project, and to discuss future strategies for improving the management and protection of migrant workers' rights.

The meeting was held in Lao capital Vientiane, providing an opportunity to review the project's progress and discuss strategic directions to further strengthen support for migrant workers, according to a report from the Lao Ministry of Labour and Social Welfare on August 15.

The Promise is a regional project implemented from 2021 to 2025 across Cambodia, Laos, Myanmar, and Thailand. It aims to remove barriers faced by migrant workers, employers, and communities, contributing to poverty reduction while supporting economic recovery and growth.

The project focuses on ensuring access to skills development, self-employment, and stable job opportunities, especially for female migrant workers.

Laos' Ministry of Labour and Social Welfare continues its efforts to manage and protect the rights of migrant workers through various legislative measures, including revisions to the Employment Law.

In addition, the government is working to improve the domestic employment situation by raising the minimum wage, expanding access to vocational training, and creating job opportunities for returning migrant workers.

- IANS

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Reader Comments

P
Priya S
From 40.3% inflation to 5.3% is impressive progress! Shows what good monetary policy can achieve. The PROMISE project for migrant workers is also much needed in that region.
A
Aman W
While rate cuts help, they need to be careful about external factors like US interest rates and oil prices. Our RBI has to balance similar challenges. Hope Laos manages it well!
S
Sarah B
The focus on migrant workers' rights is crucial. Many Southeast Asian countries depend on remittances. Proper protection and skill development will benefit both workers and the economy.
V
Vikram M
Third rate cut this year shows they're serious about growth. But 9% is still quite high compared to other countries. Hope it translates to actual benefits for small businesses and households.
N
Nisha Z
Good to see regional cooperation through the PROMISE project. Migrant workers often face exploitation. More countries should implement such protective measures 👏

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