In early March 2025, the State Bank of Vietnam (SBV) proactively supplied low-cost capital to commercial banks to facilitate a reduction in market interest rates and bolster economic growth.
The SBV implemented several measures, including daily purchases of valuable papers with varied maturities, extending up to 91 days, to promptly meet liquidity needs of credit institutions and stabilize market sentiment. Additionally, the SBV gradually lowered the issuance interest rate of its bills from 4.0% to 3.1% per annum as of March 4, 2025, and ceased bill issuance entirely from March 5, 2025. These actions signaled a strong commitment to reducing market interest rates, leading to a decline in interbank rates to approximately 4.0% per annum for short-term transactions by March 5, 2025.
Following directives from the government and the SBV, 12 commercial banks reduced their deposit interest rates, with some implementing significant cuts—up to 0.7% on average. Consequently, many banks introduced credit packages tailored to current needs, particularly in consumer lending and social housing loans for low-income individuals.
Experts acknowledge the banking system’s efforts to lower interest rates and support businesses. However, they emphasize that, alongside interest rate policies, other measures are necessary to sustain growth. Excessive reductions in interest rates could prompt depositors to seek higher-yield investments elsewhere, potentially impacting the capital available for growth.
Looking ahead, the SBV plans to closely monitor interest rates to balance the autonomy of commercial banks with the need to reduce lending costs across all terms. The SBV will continue to manage tools to ensure banks have sufficient liquidity without increasing deposit rates, maintaining a stable and supportive financial environment.
Source: CafeF
