Signaling interest rate cuts

On July 5, the VND lending interest rate on the interbank market - where banks borrow capital from each other - for overnight term was only 11%/year, 1-week term was 13-14%/year, 1-month term was 13.5%/year, lower than the regulated ceiling interest rate of 14%/year.

The cooling of interest rates in the interbank market has had an effect on the residential market. Some banks have just adjusted their VND deposit interest rates to below 14%/year. At Saigon Bank (SCB), the deposit interest rate for regular deposits with a term of 6-13 months is 13.5%/year, and for deposits over 13 months is 13%/year. At Eximbank, the highest listed interest rate is 13.85%/year for regular savings and 13.97%/year for certificates of deposit...

Currently, banks only prioritize interest rate agreements with customers with large deposits, usually over 500 million VND, or customers with long-term relationships. Individual customers depositing small amounts of money only receive interest rates according to the posted schedule.

On July 4, the State Bank lowered the 7-day open market lending rate (OMO) from 15%/year to 14%/year, equal to the interest rate before May 17. According to experts, it can be understood that by lowering the lending rate on the open market, the State Bank is sending a signal of flexible monetary policy management, paving the way for a gradual reduction in lending rates. However, it is difficult to expect a deep reduction in interest rates because the State Bank still has many other tools to limit capital injection into the market.

Open market operations are the short-term purchase and sale of valuable papers (bank bills, treasury bills, etc.) by the State Bank with credit institutions. Through the purchase and sale of valuable papers, the State Bank will influence the available capital of credit institutions, regulate the money supply and influence interest rates in the market.

According to Tuoi Tre