Market Highlight 08.05.2025

  The U.S Federal Reserve held its benchmark interest rate steady at 4,25% - 4,5% on Wednesday, citing rising risks of inflation and unemployment that continue to cloud the outlook for the American economy. President Donald Trump’s trade policies have unleashed a wave of uncertainty, with concerns mounting that steep tariff increases could stoke inflationary pressures and constrain economic growth. FED Chair Jerome Powell stated he would not move to cut rates until there is greater clarity on trade policy direction - something that must come from the White House. Markets are now pricing in an 85% chance of three rate cuts this year, with the first expected as early as July. However, should the FED’s inflation concerns materialize, there remains a scenario in which no cuts occur at all in 2025.
  Meanwhile, the People’s Bank of China announced on Wednesday that it would reduce interest rates and inject additional liquidity into the financial system to help the economy withstand mounting trade tensions with the U.S. China’s policy focus in the coming months will be on stimulating domestic demand and revitalizing consumption. Chinese households and businesses have been scaling back spending due to the persistent weakness in the property sector and growing concern over the country’s economic outlook under the pressure of U.S tariffs. Recent data, however, suggest that Beijing’s efforts to boost domestic consumption are beginning to yield positive early results.
  In Vietnam, the USD/VND exchange rate edged down slightly and traded steadily around 25.950 on Wednesday as markets awaited the outcome of the FED’s policy meeting. With the USD gaining nearly 0,5% overnight and several USD purchase flows expected today, the exchange rate is forecast to rise again, hovering near the 26.000 level.

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