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Macroeconomics report “More room for possible rate hike in 2016- a threat?”

​“More room for possible rate hike in 2016- a threat?” is the title for RongViet Research’s Macro teams special report.

Interest rate in an economy has always drawn great attention from policy makers, businesses and the public. However, anticipating the interest rate long-term trend is never an easy job as it has been under influence by various macroeconomic indicators such as inflation, liquidity, capital demand and supply and even broader factors such as the nation’s economic health.

2015 is coming to an end with multiple optimistic highlights regarding positive growth, lower inflation as well as well-timing monetary policies implemented by the SBV. The market rate movement thereby declined comparing to the beginning of the year, as the money market was stable with sustainable liquidity.

On the other hand, 2016 situation raises questions regarding the appropriate policies while internal and external factors are putting pressure on the interest rate. In particular, we consider the government’s increased debt rate and the risk of imbalanced money supply-demand possible at the current rate to be the greatest pressures.

In addition, other factors such as a possible increase in inflation rate besides the credit demand in order to match the economic growth target and effects from FED’s rate hike may need closely monitoring.