Việt Nam’s rising interest rates could challenge next year’s credit growth, but experts say measured hikes may control inflation while supporting economic expansion.

Banking expert Nguyễn Trí Hiếu, PhD. VNS Photo

Low interest rates maintained for an extended period by banks have significantly supported Việt Nam’s GDP growth of 7.85 per cent in the first three quarters of this year. However, rates have shown clear signs of rising again since the fourth quarter of 2025, with many banks increasing them by around 0.5 percentage points compared with October.

Việt Nam News reporter Thu Hà speaks with banking expert Nguyễn Trí Hiếu, PhD, about the potential impact of the rate hike on credit and GDP growth in the coming months.

What is the cause of the recent increase in interest rates after staying low for a long time? How do you forecast the interest rates in the coming period?

There are two reasons for the interest rate hike.

First, credit growth this year is very high and could hit 18 per cent, or even higher – the highest level in the past decade.

Second, the deposit growth rate is significantly lower than the credit growth rate. In the first three quarters of 2025, credit surged by nearly 14 per cent while deposits increased by only 9.7 per cent. Meanwhile, according to current legal regulations, the loan-to-deposit ratio (LDR) is only allowed to be at a maximum of 85 per cent.

This means that total outstanding loans may be exceeding total deposits. This capital gap has forced banks to raise interest rates to attract depositors to meet capital needs, especially at year-end when demand for capital is high.

Once deposit interest rates increase, they will also push up lending interest rates, because banks have to maintain a profit margin between lending and deposit interest rates.

I think interest rates will continue rising next year, unless the State Bank of Vietnam (SBV) adopts a looser monetary policy.

How will the interest rate hike affect credit and GDP growth in the coming period?

After nearly 11 months in 2025, credit growth has been very high. So I think this interest rate hike will not have much effect on credit and GDP growth this year.

However, the hike will have significant impacts on the indicators in 2026, as interest rates are expected to continue rising next year.

As we know, the Government has set a GDP growth target of up to 10 per cent for next year. That means credit growth must reach around 20 per cent. If the lending interest rate continues to rise to high levels, it will be very difficult to achieve a credit growth rate of 20 per cent, unless the SBV takes other measures besides interest rates to inject a large amount of money into circulation.

Therefore, I think that the interest rate hike is not this year's concern but will likely become next year’s concern unless the SBV adopts a looser monetary policy.

In your opinion, what level of interest rate hike can still help credit continue to act as a key driver for economic growth next year?

I think it is reasonable to allow lending interest rates to increase by about 0.5–1 percentage point next year.

In my opinion, when the interest rate rises, it has two impacts. First, it will help control inflation better. Second, if banks increase interest rates at an appropriate level, this will also support banks so that they can strongly push credit into the market.

So it has positive impacts if interest rates are raised at an appropriate level.

In the current context, are there any positive factors that can help reduce pressure on interest rate hikes in the coming period?

The US Federal Reserve (Fed) is expected to make a decision related to interest rates at its meeting next month, and that decision might affect Việt Nam’s interest rates.

The Fed is currently under pressure from the Donald Trump administration to reduce interest rates. However, US economic indicators seem unfavourable for a rate cut, with inflation at a high level of 3 per cent and the unemployment rate above 4 per cent. With such economic signs, if the Fed reduces interest rates, it may cause inflation to flare up, which is a concern for the Fed.

At this time, it is very difficult to predict whether the Fed will lower interest rates or not. But I think that, with pressure from the Trump administration, the possibility of the Fed lowering interest rates is high, at around 60 per cent.

If the Fed cuts interest rates, it will help reduce pressure on the exchange rate of the Vietnamese đồng against the US dollar, because a rate cut will devalue the dollar. At that time, the SBV will have more room to cut interest rates to support economic growth. So it may be beneficial for Việt Nam if the Fed reduces interest rates.

Under the context of high credit growth, what should authorities do to ensure that credit flows into production and business to promote economic growth, rather than highly speculative sectors?

This is a very big problem, as rapid credit growth often stimulates speculation, increasing financial risks. There is a possibility that a significant amount of credit could flow into speculative markets such as gold, stocks and real estate.

To direct credit flows into production and business, a very large national plan is needed. It requires close cooperation between the Government, the SBV, the Ministry of Finance, the Ministry of Construction, the State Securities Commission, and commercial banks to develop a comprehensive and strict risk control programme that channels capital into production and business while avoiding speculative sectors. BIZHUB/VNS

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