Interest rates have been gradually rising. In the context of the State Bank of Vietnam (SBV) continuously injecting liquidity through open market operations to fully meet the system’s short-term capital needs, the increase in interest rates generally reflects the reality of strong money demand in the economy. Rising money demand may signal expanding business activity. In this context, higher interest rates can be considered normal.

Interest rates are inching up—without signs of overheating To achieve the economic growth target of at least 8% in 2025, the Government instructed the SBV early in the year to accelerate credit growth with a full-year target of 16%. Alongside monetary policy, fiscal policy has also been expansionary as the Government has continuously pushed for faster disbursement of public investment. By the end of the first nine months of this year, credit had already risen 13.37% compared with the end of 2024—its fastest pace in roughly 15 years. Money demand surged under the combined influence of both fiscal and monetary expansion, aided by a low interest-rate environment in the first half of the year. Credit growth in the first nine months outpaced deposit mobilization (which increased only about 10%), creating upward pressure on interest rates in the primary market, even though the SBV consistently injected capital via open market operations to supply liquidity to the broader economy in a timely manner. Twelve-month deposit rates have increased from around 5–6% per year in the first half of the year to 5–7% in the second half; lending rates have risen accordingly. Clearly, interest rates have risen, but not overheated. To evaluate instability concerns, we can compare interbank rates in two periods: 2022—marked by significant financial market turbulence in Vietnam—and the current period, 2025. In 2022, interbank rates for overnight, one-month and three-month maturities (the most frequently traded tenors representing general interbank developments) surged sharply, especially in the second half. Overnight rates increased from nearly 2% in the first half of the year to as high as 6% in the second half; similarly, one- and three-month rates rose from around 2% to more than 8%. This sudden spike triggered losses in various interest-rate arbitrage positions and led to asset sell-offs on financial markets, creating widespread instability. In contrast, in 2025, interbank rates have been steadily increasing, generally ranging from 4–6% across overnight to three-month maturities. But the increases have been gradual, with no overheating phases. Overnight rates have even experienced intermittent sharp declines. Crucially, there has been no wave of asset dumping or panic sentiment in financial markets. The absence of panic indicates that macroeconomic conditions remain stable. Shifting monetary policy objectives toward year-end Although rates are not overheating and liquidity across the economy is still ensured, rising interest rates are nonetheless not an ideal signal. Therefore, shifting monetary policy objectives in the final months of the year could be considered to limit potential adverse impacts on macroeconomic fundamentals. It is likely that full-year credit growth will reach around 16% or more, and the 8% GDP growth target will be achieved, laying the groundwork for double-digit growth in subsequent years. In the final months of the year, as money demand remains high and interest rates rise, the next potential monetary policy goal could be to curb money demand through the interest-rate channel. Why? Containing money demand—at a time when GDP growth is already on track to meet targets—could help achieve several objectives, including limiting capital flows into real estate and keeping the exchange rate stable. Real estate prices continue to climb this year, and a significant share of market liquidity is being funneled into property. Rising real estate prices, over time, can destabilize the market, even leading to bubbles and collapse. China’s recent property market meltdown offers a clear lesson on the importance of stabilizing real estate before it inflicts broader economic damage. Regarding exchange-rate stability, higher interest rates reduce the incentive for households, businesses, and credit institutions to hold U.S. dollars. In a context where the U.S. Federal Reserve has cut rates twice and is expected to continue lowering them in December and into 2026, maintaining higher VND interest rates will strengthen exchange-rate stability at year-end. A stable exchange rate makes an important contribution to macroeconomic stability—and macro stability is essential for sustainable economic development. In the coming years, to achieve fast yet sustainable growth, monetary policy must be supported by synchronized macroeconomic policies, especially fiscal policy and expanded public investment. Vietnam’s credit-to-GDP ratio is already high, making economic growth overly dependent on monetary policy. As Vietnam’s monetary policy is constrained by—and exposed to—the U.S. Federal Reserve and increasingly complex global financial conditions, relying too heavily on monetary policy for GDP growth entails significant risks.