The central bank management of interest rate for development economies and suggestions for Vietnam

Abstract:

At the end of 2021 and the beginning of 2022, after two years of implementing the inflation-targeted monetary policy in the context of the Covid-19 Pandemic, the Central Banks of some major economies in the world are expected to return to operate again in the normal state. However, an unusual development happened, that is, starting on February 24, 2022, the Russian Federation launched a “special military operation” in Ukraine that completely changed the normal expectation of that monetary policy. Inflation in many countries rose to record levels. That development reduces GDP growth prospects of major and global economies. So how do central banks around the world manage interest rates? How is Vietnam’s inflation and how does the State Bank of Vietnam manage monetary policy in the new context, contributing to the achievement of the economy’s macroeconomic objectives according to the Government’s Resolution? The article focuses on this content of the Central Banks of developed economies in the world, making forecasts and recommendations for Vietnam.