“Credit Growth and Inflation: The Vice Governor’s Perspective on Monetary Policy”

At the regular August Government meeting held on September 6, SBV Deputy Governor Doan Thai Son announced that credit outstanding at the end of August reached VND 171.4 million billion, up 11.08% from the previous year-end. For the full year, credit growth stood at 20.19%, the highest in many years, whereas it typically hovers around 14.5%.

According to the Deputy Governor, this leads to two consequences. Firstly, banks are compelled to increase capital mobilization, potentially driving up deposit rates and subsequently lending rates. Secondly, robust credit growth implies a surge in money supply, exerting long-term inflationary pressures.

The Deputy Governor also revealed that core inflation has remained above 3% over the past period. This figure is concerning, as a 3% threshold is typically considered a warning signal for policy management.

He attributed this to both domestic and international factors. Externally, global inflationary pressures persist, with energy and raw material prices, along with unpredictable market fluctuations, driving up production and import costs. Domestically, rising housing rents and dining-out expenses, coupled with adjustments in gold prices and a range of State-managed commodities, have further fueled inflationary pressures.

“Given this trend, the SBV concurs with the Ministry of Finance on the necessity of close monitoring and flexible management. When new developments arise, we need to stay ahead of the curve. If inflation continues to show signs of escalation, proactive governance measures must be implemented immediately, rather than waiting reactively. Experience tells us that once inflation surpasses a certain threshold, subsequent control measures come at a steep cost. The SBV will maintain vigilant surveillance and take timely actions within its authority, as well as propose solutions to the Government,” affirmed Deputy Governor Doan Thai Son.

Additionally, the Deputy Governor emphasized that, particularly in August, exchange rates have been under significant pressure. This is attributed to the prevailing high USD interest rates coupled with low VND interest rates, creating an incentive for capital shifting. Moreover, while foreign loan disbursements decreased, debt repayment obligations increased.

In response, the SBV has been proactively managing exchange rates in tandem with interest rates, liquidity, and foreign currency sales as needed. As of September 4, 2025, the exchange rate stood at VND 26,380 per USD, reflecting a 0.09% decrease from August 22 but a 3.45% increase compared to the 2024 year-end rate.

Furthermore, given the objective reasons stemming from global developments, exchange rate pressures are anticipated to persist in the foreseeable future.