Monetary Policy Trends in 2025

Among these problems, maintaining an adequate money supply to support companies while meeting high growth objectives, as well as keeping inflation under control, will be important concerns.

Looking back on various monetary policy difficulties in 2024, it is clear that the SBV successfully managed monetary policy during the previous year.

Four “Achievements” in 2024

First, success in maintaining low interest rates. Despite many influencing factors and a rising capital cost trend, the SBV effectively managed the situation by requiring commercial banks to publicly disclose average interest rates and cut costs, resulting in a further 0.96% decrease in lending rates compared to 2023, following the sharp 2.5% reduction from the previous year.

Second, success in keeping inflation low. Initially, inflation in 2024 was projected to be high, and the SBV was tasked with keeping it below 4.5%. However, inflation turned out to be lower than expected, creating room for the SBV to adjust interest rates and credit growth to achieve its goals.

Third, exchange rate stability. 2024 was a challenging year with significant exchange rate fluctuations, peaking in Q2/2024 alongside major volatility in the gold market. However, the SBV successfully cooled down the exchange rate from August 2024. Although the exchange rate experienced high volatility again at the end of 2024 due to the impact of the DXY index and future international policy risks, overall, it remained within the fluctuation range set by the SBV—resulting in low depreciation and preserving the value of the Vietnamese đồng (VND) against regional and global currencies.

Fourth, positive credit expansion will bring capital to the economy. Since the beginning of the year, the SBV has aggressively established credit growth objectives. Although credit growth struggled in the early months, it increased towards the end of the year, coinciding with the economic recovery. This functioned as an important financial lever in meeting the GDP growth target for 2024, notwithstanding issues in the capital market (bonds and equities), with firms still depending largely on loan sources.

The “Gold Test” for Policy in 2025

Dr. Dinh The Hien said in the year of Ất Tỵ 2025, the SBV will face a “gold test” in managing monetary policy to overcome emerging challenges.

Firstly, interest rates at small commercial banks have continued to rise since Q3-Q4/2024, indicating potential capital difficulties for these banks. It raises the question of whether they are struggling to meet debt recovery targets. Therefore, the SBV must stabilize interest rates and support liquidity for smaller banks to prevent capital shortages from disrupting the low-interest-rate environment achieved in 2024. In other words, the SBV will face a critical test in maintaining stable and low interest rates, as seen in the previous year.

Next, the banking monetary authority will have to address the challenge of businesses and the economy needing new capital from the money supply. Statistics show that although the 50 largest listed companies on the HoSE experienced revenue and profit growth, their cash flows declined. This is not paradoxical, as increasing profits do not offset liabilities without additional capital infusion. Thus, in 2025, businesses will urgently require fresh capital to drive business growth and meet the economy’s high growth targets. However, if the authorities significantly increase the money supply, they may face inflation risks. Additionally, exchange rate risks may arise from the impact of new tariff policies under President Donald Trump.

"Overall, 2025 provides favorable conditions for monetary policy management. On the macroeconomic front, the economy is forecast to grow at 8%, led by increasing public investment and a reviving domestic consumer sector that supports diverse output industries. However, 2025 will not yet be a year of full recovery for business health. As a result, in addition to monetary policy management aimed at supporting enterprises, it is critical to coordinate with fiscal policy in a non-restrictive way, as well as direct stimulus packages," said Dr. Dinh The Hien.