The Government has set an ambitious GDP growth target of 8% or higher in 2025 to create a strong foundation for growth in the coming years. Given that economic growth in Vietnam relies heavily on credit, maintaining low lending rates is seen as a crucial factor in supporting businesses and households. However, with the huge pressures from the high growth target, exchange rate volatility and rising bad debt, is there still room for more lending rate cuts? Interest rate pressures According to the State Bank of Vietnam (SBV), credit growth in 2024 reached 15.08%, while the average lending rate fell by 1.72 percentage points compared to 2023. Meanwhile, capital mobilization grew by over 9.1%, with deposit rates rising by an average of 0.71 percentage point. When factoring in capital raised through bond issues—totaling over VND302 trillion—total capital mobilization by credit institutions increased by only 11.5%. This widening gap between credit growth and capital mobilization raises concerns about renewed interest rate hikes. For 2025, the SBV has set a credit growth target of 16%, subject to adjustments based on market developments. However, in the first two months of the year, pressure from economic expansion and exchange rate risks led several banks […]