General

At present, the trend of interest rate hikes around the world is becoming more and more obvious. In particular, the Federal Reserve recently raised the target range of the federal funds rate by 75 basis points, which is the largest interest rate hike in the past 30 years. These factors put enormous pressure on the implementation of the State Bank of Vietnam's monetary policy, especially the interest rate policy. Recently, Vietnamese commercial banks have raised the annual interest rate of time deposits by 0.3-0.5%, and some banks have raised the rate by 0.6-0.8%, in order to increase the absorption of public deposits and meet the growing demand for credit.

According to the report, the world economy is currently facing high inflation pressure. Vietnam has a high degree of economic openness, with foreign trade imports and exports accounting for 190% of GDP. The rising prices of raw materials in the international market, especially crude oil, have increased domestic inflationary pressures in Vietnam. Central banks in many countries have tightened monetary policy to combat rising inflation. In the context of interest rate hikes in various countries, the State Bank of Vietnam and various commercial banks still implement the policy of reducing loan interest rates (three times in 2021 alone) to help enterprises resume production and operation. The loan interest rate reduction is the largest in ASEAN. of. Vietnam's commercial banks face the difficulty of rising deposit rates, but not raising loan rates. Vietnam's economic circle believes that it is very difficult to continue to reduce the loan interest rate this year, and it is a success to maintain the existing interest rate. Tao Minh Hsiu, executive vice president of the State Bank of Vietnam, said that Vietnam's economy has been under tremendous pressure from the international market to raise interest rates for some time, but the government has kept the loan interest rate relatively stable to support enterprises to resume production. Next, the State Bank of Vietnam will continue to maintain the current interest rate level so that credit institutions can obtain lower-cost funds and provide lower-interest-rate loans to enterprises to continue to help enterprises resume production.