Interest rates forecast to peak in Q1 2026

Interest rates forecast to peak in Q1 2026

Interest rates are expected to peak in early 2026 before easing slightly, as strong capital demand persists and Việt Nam’s economic outlook remains stable and growth prospects robust.

Bank interest rates have been trending upwards rapidly since the final months of 2025. — Photo vietnambiz.vn

Interest rates are likely to continue rising and reach a peak in the first quarter of 2026 before gradually stabilising and edging lower to support economic growth, according to Lê Anh Tuấn, general director of Dragon Capital Vietnam.

However, the head of the Việt Nam-focused fund management firm said a sharp fall in rates should not be expected, as demand for capital remains very high.

The forecast comes as bank interest rates have climbed rapidly since the final months of 2025, with many lenders offering deposit rates of more than 7.5 per cent a year across various tenors.

On exchange rates, Tuấn said the outlook is more positive. After a period of volatility linked to tariff factors, the exchange rate has stabilised again, despite a sharp rise in gold prices. The gap between official and free-market exchange rates has also narrowed markedly.

He added that the potential appointment of a new US Federal Reserve chair and expectations of more than two interest rate cuts in 2026 would help narrow the interest rate gap between Việt Nam and international markets, creating favourable conditions for the Vietnamese đồng.

Addressing concerns that the Vietnamese economy has borrowed excessively, Tuấn said borrowing should be assessed across both bank credit and capital market channels, including corporate bonds. Overall, Việt Nam’s level of borrowing remains moderate, particularly in the corporate sector.

He forecast economic growth in 2026 could exceed 9 per cent, with inflation staying below 4 per cent. Money supply is expected to rise by about 12.5–13 per cent, while exchange rates are projected to fluctuate within a 1–2 per cent range. Macro-economic indicators remain broadly stable, with no major risks identified. 

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