Although deposit interest rates continue rising, predictions about the central bank’s policy rates have shifted significantly. What has led to these new expectations for future monetary policy? Interest rate rise inevitable as liquidity declines Techcombank hiked the deposit rate for one to two-month terms by 0.2 percentage point to 2.9% per year as from August 10, 2024. This was Techcombank’s fourth rate hike in less than four months. VIB recently raised the deposit rate by 0.2 percentage point to 3.2% per year for the same term, marking the ninth increase since May. Following strong increases in June and July, August continues to see a wave of deposit rate hikes across banks, including VPBank, TPBank, OCB and VietBank. With the banking system’s liquidity no longer as abundant as before, the steady spikes in deposit rates is understandable as credit growth accelerated in the second half of Q2 2024 and the State Bank of Vietnam (SBV) increased U.S. dollar supply to stabilize the exchange rate. To somewhat ease the pressure on interest rates and compensate for the Vietnam dong being absorbed through the foreign exchange channel, the SBV has increased Vietnam dong injections into the banking system through Treasury bills and open […]