UOB expects policy rates to remain unchanged

Experts say that the State Bank's monetary policy is still performing its task of supporting economic growth.

The Vietnam Economic Growth Report Q1 2025 recently released by the Global Economics and Market Research Department of UOB Bank assessed that Vietnam's headline and core inflation in the first quarter of this year and most of last year remained below the target threshold of 4.5%.

The State Bank has more room to loosen monetary policy, but unfavorable external factors may impact the USD/VND exchange rate. UOB's current baseline scenario is that the State Bank will keep its policy interest rate unchanged, with the refinancing rate maintained at 4.50%.

However, the risk trend is leaning towards the possibility of interest rate reduction due to downward pressure from business and export activities, in the context of external difficulties affecting the Vietnamese economy.

“If the domestic business and labor market conditions deteriorate significantly in the next 1-2 quarters, we see the possibility of the SBV cutting the policy rate to the COVID-19 low of 4.00%, followed by a further 50 basis points reduction to 3.50%,” UOB forecasts. This forecast is based on the assumption that the foreign exchange market is stable and the US Federal Reserve (Fed) implements interest rate cuts as expected.

Source: https://thoibaonganhang.vn/uob-ky-vong-lai-suat-dieu-hanh-se-duoc-giu-nguyen-162653.html