Interest rate forecast to increase again
After a long period of maintaining at a record low, deposit interest rates at banks are expected to soon enter an upward adjustment cycle. This forecast is made in the context of the economy expected to recover strongly by the end of 2025 - early 2026, causing capital demand to increase again and exchange rate and inflation pressures to become more obvious.
According to KB Vietnam Securities Company (KBSV), the deposit interest rate level is likely to increase by about 1-2 percentage points in the new cycle, starting from the fourth quarter of 2025.
"The possibility of further reductions is very low because real interest rates after deducting inflation are no longer attractive, especially for 6/12 month terms. Meanwhile, the liquidity pressure of the system may increase if credit demand recovers in line with GDP growth expectations" - KBSV analyzed in the updated report for the second quarter of 2025.
The view shared by VNDirect Securities Company predicts that the 12-month term deposit interest rate may increase to 5.25.3%/year by the end of this year. VNDirect emphasized: "The GDP growth target of 8% will stimulate economic sectors to become vibrant again, leading to a sharp increase in credit demand, forcing banks to raise deposit interest rates to ensure input capital."
From the same perspective, SSI Research believes that capital costs will increase in 2025, with an increase of about 17 basis points over the same period.
SSI's banking industry strategy report emphasizes that many joint stock commercial banks are accepting narrowing net interest rates to support customers, but in the long term, they will have to adjust their input interest rates if they want to maintain financial stability.
Another factor that could increase interest rates is pressure from exchange rates and policies of major central banks.
According to HSBC, the interest rate cut cycle of the US Federal Reserve (Fed) could end at the end of 2025, then remain stable or even increase slightly if the US economy recovers strongly. At that time, the VND'USD interest rate gap will narrow, putting pressure on the domestic exchange rate. To maintain the attractiveness of VND and prevent capital flows from reversing, Vietnam may have to adjust interest rates in a slightly increasing direction.
A reverse scenario
However, the opposite scenario was also set. If domestic inflation is well controlled, foreign capital flows are stable and the liquidity of the system is abundant, the State Bank can completely maintain a loose monetary policy for a longer period of time. This was clearly demonstrated last year, when operating interest rates decreased but the exchange rate was still under control thanks to strong foreign exchange reserves and a balance of surplus payments.
In all cases, according to analytical organizations, the possibility of deposit interest rates returning to a peak of over 9 10% as in the end of 2022 is very low, unless there is a serious macro shock.
The neutral scenario assessed by KBSV and SSI is that 12-month term deposit interest rates could return to 6% by the end of 2025 and fluctuate around 6.57% in 2026, depending on inflation and capital flows.
In short, deposit interest rates in Vietnam are at the bottom and will likely start to adjust up from the end of 2025, following the recovery of the economy and macro pressures such as inflation, exchange rates and credit demand. Monetary policy is likely to continue to be flexibly managed by the State Bank, closely following actual developments to both support growth and maintain macroeconomic stability in the medium and long term.
In the short term, it is forecasted that in the second and third quarters of 2025, deposit interest rates will generally move around the current level or decrease slightly at some banks. Read the reason HERE.
