The State Bank of Vietnam increases interest rates from October 25
Following the central bank’s decision, key interest rates would be hiked by one percentage point, with effect from today. The interest rate cap for deposits of one to less than six months at credit institutions will increase from 5 percent per year to 6 percent per year while the maximum interest rate applicable to demand deposits with a term of less than 1 month is from 0.5 percent per year to 1 percent per year
Specifically, the State Bank increased the refinancing interest rate from 5 percent a year to 6 percent a year while the discount rate from 3.5 percent a year to 4.5 percent a year.
Moreover, for overnight loans in interbank electronic payments and loans made by the central bank in clearing transactions with local commercial banks and foreign bank branches, the interest rate will surge from 6 percent to 7 percent per year.
Especially, the maximum interest rate for savings in Vietnamese dong at people's credit fund and micro-finance organizations from 5.5 percent per year to 6.5 percent per year. Interest rates for deposits with a term of 6 months or more are set by credit institutions on the basis of market capital supply and demand.
The maximum short-term lending interest rate in Vietnamese dong of credit institutions for borrowers to meet capital needs for the number of economic sectors and industries increased from 4.5 percent a year to 5.5 percent a year.
According to the State Bank of Vietnam, following the resolution of the National Assembly and the direction of the Government, the State Bank of Vietnam operates the monetary policy proactively and flexibly, closely coordinating with the fiscal policy and other macroeconomic policies for the control of inflation and economic recovery, prompt adaption to domestic and foreign market developments; thereby, it helped to stabilize the currency and foreign exchange markets and the banking system.
However, global inflation is still high, the US Federal Reserve (FED) has raised five times the target interest rate to 3 percent -3.25 percent per year. Nevertheless, it is forecast FED will continue to increase in the last months of 2022 and 2023, the appreciation of the US dollar will impose pressure on interest rates and domestic exchange rates as well as pressure on inflation. In order to continue implementing synchronous measures with the aim to control inflation, stabilize the country’s macro-economy and currency, and ensure the operation of the banking system, the SBV decided to adjust the above operating interest rates from October 25, 2022.
The SBV also said it would closely monitor domestic and international market developments to promptly and synchronously administer solutions and monetary policy tools. Additionally, it is ready to intervene in the currency and foreign exchange markets to meet the liquidity needs of credit institutions; thereby, the market and the operational safety of the banking system will be more stable.