NSI expects Q2 CPI to be affected by delayed effects from rising oil prices, inflation target 4.5% remains fragile

March 2026 marks a period of intensified global volatility as the Middle East geopolitical conflict becomes the central shock for financial markets. The main risks are tied to energy prices and supply-chain disruptions, with renewed concerns over the Hormuz Strait pushing inflation pressures higher again.

Global monetary policy shifts as energy shock reintroduces inflation risk

The developments reverse expectations for monetary policy. The easing cycle that had formed since late 2025 is being wound back, prompting major central banks to re-prioritize inflation control.

By mid-March, major central banks jointly shifted their focus from supporting growth to controlling inflation as energy shocks reintroduced price risks.

United States (Fed)

The Fed kept its policy rate at 3.50%–3.75% and signaled greater caution. Its 2026 Core PCE forecast was raised to 2.7%, and the long-run neutral rate increased to 3.125%.

Eurozone (ECB)

The ECB held rates steady but faced a tougher outlook. Inflation was projected to rise to 2.6%, while growth was trimmed to 0.9%, reflecting rising inflation risk in Europe.

Japan (BoJ)

The BoJ kept rates low, but tightening pressures intensified. The yen weakened and energy import costs rose, leading markets to expect the BoJ to continue raising rates in 2026.

Vietnam: growth holds up, but inflation remains a key concern

In Vietnam, Q1 2026 GDP growth is estimated at 7.83% year-on-year, up from 7.07% in Q1 2025. The data points to a positive and more balanced recovery across sectors, though the pace remains below the 9.1% scenario needed to reach the full-year growth target of 10%.

The shortfall is attributed mainly to input cost pressures and limited private-sector capacity to absorb capital.

NSI warned that inflation is one of the hottest points in the Q1 2026 economy.

CPI accelerates in March

March 2026 CPI rose 1.23% month-on-month and 4.65% year-on-year, the highest March CPI in five years. Brent crude above $110 per barrel has fed into CPI through transport and logistics costs.

Unlike previous cycles, the current pressure is described as more long-term because geopolitical risks in the Hormuz Strait are not easing. Excluding volatile items, core inflation shows a steady upward trend, indicating higher input costs are beginning to permeate final goods and services.

Transport costs spread to food; Q2 inflation risk

With a 10-day cycle of gasoline price adjustments, cost-push pressures have spread from transport to food, with transport costs up 15%. CPI Q2 is forecast to bear the delayed effect, creating a fragile boundary around the 4.5% inflation target.

Exchange-rate pressure raises costs for domestic producers

USD/VND nearing historical highs is pressuring import costs and increasing opportunity costs for domestic exporters. Domestic producers face a “vice” scenario: logistics costs up 18–22% due to oil at $110 per barrel and rising input costs alongside the exchange rate.

Money market tightens as SBV prioritizes FX stability

In March 2026, Vietnam’s domestic money market faced heavy external pressure as the USD strengthened, delaying expectations of Fed rate cuts and increasing USD/VND volatility.

To defend the exchange rate, the State Bank of Vietnam tightened liquidity, reactivated treasury bills from March 11, and maintained net withdrawals via OMO, signaling a preference for FX stability over keeping money cheap.

Interbank rates moved sharply, particularly at month-end when the overnight rate jumped to 12%, reflecting near-term liquidity pressures—especially among banks with thin capital buffers and heavy reliance on the interbank market.

Towards month-end, SBV intervened more flexibly to cool the market, including selling adjustable-term USD and conducting large liquidity injections. This helped stabilize the exchange rate and interest rates gradually, though the gap between credit growth and mobilization remains a risk.

Deposit-rate adjustments and implications for the next credit cycle

Under pressure from high interbank funding costs and SBV interventions, commercial banks adjusted deposit rates on the retail market. In March, deposit rates for six months and longer rose by 0.1 to 1.4 percentage points. Some banks even quoted rates as high as 8–9% per year to attract idle funds amid strong competition from gold and stocks.

This is described as preparing resources for a new credit growth cycle in Q2 while reducing dependence on the volatile interbank market.