Vietnam skyline

Vietnam Monetary Policy September 2019

Vietnam: State Bank of Vietnam joins the global easing wave in September to ward off growth risks

On 16 September, the State Bank of Vietnam (SBV) reduced four key interest rates by 0.25 percentage points each, including the refinancing rate, which now sits at 6.00%. The move took panelists by surprise, as the majority had seen rates unchanged until end-2019.

The SBV justified its decision by highlighting recent monetary easing by many central banks, led by the U.S. Federal Reserve. Global trade tensions have risen in recent months, presenting external downside risks to growth, while inflation sits comfortably below the 4% target for 2019, providing the Bank with leeway to trim rates to support the economy. That said, the impact of monetary loosening on economic activity could be limited given that most of the rates are largely decoupled from the market, meaning the impact on average market interest rates could be small.

Looking ahead, the SBV gave no explicit guidance on future rate movements. That said, given economic activity is still perky despite a more adverse external environment—and is seen remaining strong going in to 2020—further easing may not be required. Virtually all panelists see the Bank staying on hold for the rest of 2019, with a small minority of panelists expecting rates to remain unchanged until end-2020.

As economists at Fitch Solutions comment: “We expect the central bank to remain on hold over the coming months to observe the impact of its rate cut on the economy before making further adjustments”.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest