{
  "id": 17043919,
  "title": "Experts outline ways to sustain interest rate cuts",
  "url": "https://urgent.news/2026/10/29/experts-outline-ways-to-sustain-interest-rate-cuts",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-29T10:10:00.000Z",
  "source": {
    "name": "Vietnam Investment Review",
    "slug": "vietnam-investment-review",
    "url": "https://vir.com.vn/experts-outline-ways-to-sustain-interest-rate-cuts-164016.html"
  },
  "original_language": "en",
  "account": "Since the start of the week, several banks have reduced interest rates in response to government and State Bank of Vietnam directives. Experts stress that for these cuts to be sustainable amid high capital demand, non-bank funding channels must be utilized, especially the domestic capital market and international capital flows. By October 28, over 20 commercial banks had lowered deposit interest rates, averaging a 0.5 percentage point cut for six-month or longer maturities, and selectively reduced lending rates for priority borrowers. To avoid a rapid rise in bad debts, additional funding sources are necessary to ensure sustainable rate reductions. With loans still exceeding deposits by about $60 billion, banks urgently need capital. While preferential credit packages have boosted market sentiment, they are insufficient to lower rates across the market of over $800 billion in outstanding loans. If deposit rates are cut too quickly, deposit inflows into the banking system could reverse. Vietcombank's chairman acknowledged the main challenge is lowering banks' funding costs while protecting depositors. The State Bank of Vietnam has mandated banks to cut deposit rates by 0.5 percentage point per annum for six-month or longer maturities and reduce lending rates by 1.5-2 percentage points per annum for priority sectors. To achieve lasting rate reductions, macroeconomic, fiscal, and monetary policies must be coordinated to bring interest rates in line with economic and business profitability while meeting future investment needs. This requires developing capital markets and banks mobilizing funds before extending loans. International capital mobilization is another solution, with banks like Nam A Bank and SHB Bank issuing international bonds in recent months. The government may also consider returning to international bond issuance and upgrading Vietnam's sovereign credit rating to improve access to global capital markets. Experts recommend reducing reliance on the banking system and increasing foreign borrowing to ease pressure on the domestic capital market, especially as international tensions ease and inflation declines.",
  "summary": "As banks cut interest rates amid mounting capital demand developing domestic capital markets and tapping international funding prove crucial to easing liquidity pressures and sustaining lower borrowing costs",
  "key_points": [
    "Banks cut deposit rates by 0.5 percentage point for six-month or longer maturities.",
    "Lending rates reduced by 1.5-2 percentage points for priority sectors.",
    "International capital mobilization and upgraded sovereign credit rating recommended."
  ],
  "editors_take": "Diversifying into international capital flows and domestic markets is essential for banks to maintain lower lending rates without risking deposit outflows or a surge in bad debts.",
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}