Vietnam rates stay high through 2026, easing later

BSC’s Bui Nguyen Khoa said the State Bank of Vietnam has limited room to lower rates right now, with the gap between the dong and the dollar still a key constraint. If local rates fall too far while US rates remain elevated, dollar hoarding can intensify and add fresh pressure on the foreign-exchange market. Inflation is also running close to the central bank’s 4.5% target, making a near-term easing cycle difficult to justify.

The funding backdrop is just as important. Banks are competing harder for deposits as loan demand rises and cash inflows fail to keep pace. One Hanoi banker said actual rates on large deposits are already well above posted levels, a sign that the cost of capital is still moving higher under the surface. That makes it harder for lenders to bring down loan rates, especially when credit limits at some banks are already close to full.

The policy picture is not one-dimensional. Lê Văn Thành of WiGroup said it is important to separate the State Bank’s operating rates from market rates on deposits, loans and interbank funding. Even if the Federal Reserve keeps tightening, Vietnam does not have to mirror the move mechanically. But the domestic priority remains growth, and that goal is being constrained by currency stability and inflation management.

The most constructive view points to 2027, not 2026. Yuanta Vietnam’s Lý Thị Hiền expects rates to stay elevated through the end of 2026, with only a modest uptick early in 2027 before easing more meaningfully in the second and third quarters. Khoa sees a similar window opening as accelerated public investment spending later this year returns liquidity to the system and as new credit quotas are issued in 2027.

For investors, that sets up a clear trade-off. Banks, depositors and holders of cash-like assets remain in a stronger position than highly leveraged property and domestic consumption names that depend on cheaper money. The market underestimates how long a high-rate environment can last once exchange-rate stability and capital needs become the policy priorities.

The actionable takeaway: this is still a wait-for-liquidity story, not an all-clear for rate-sensitive assets. Position for a late-cycle easing turn in 2027, but expect the next several quarters to favor balance-sheet strength, pricing power and businesses that can fund growth without relying on falling rates.