Market Highlight 19.06.2025

   The U.S Federal Reserve announced late Tuesday that it would maintain its benchmark interest rate within the 4,25% - 4,5% range, while reaffirming its projection for two rate cuts by the end of 2025. To continue the easing cycle initiated in late 2024, FED Chair Jerome Powell emphasized that further reductions would require clear signs of labor market weakening or compelling evidence that inflation has sustainably returned to target - especially in an environment of elevated tariffs. In its updated economic projections, the FED raised its median forecast for year-end 2025 inflation from 2,7% to 3%, while lowering its growth forecast for the same year from 1,7% to 1,4%. These adjustments underscore the policy dilemma confronting FED officials: rising inflation typically calls for tightening to cool the economy, while weaker growth argues for stimulus via rate cuts. Since the beginning of the year, President D. Trump has repeatedly urged the FED to lower rates, arguing that the economy requires stronger central bank support. However, escalating geopolitical tensions in the Middle East now provide the FED with additional justification to keep rates elevated, as surging energy prices threaten to reverse recent disinflationary trends. The conflict between Israel and Iran has driven global crude prices sharply higher, reaching around $75 per barrel, further complicating the FED’s upcoming policy decisions.
   On Wednesday, the USD appreciated against most major currencies but slipped 0,1% versus the Japanese yen after the FED held rates steady in June, citing persistent economic uncertainty and the ambiguous effects of President Trump’s tariff regime. Domestically, the USD/VND interbank exchange rate rose by an additional 20 VND during the day, closing at 26.105. The dollar’s global strength, coupled with a sharp decline in VND interest rates for short-term tenors in the interbank market, has supported continued upward momentum in the exchange rate. Today’s trading range is expected to hover between 26.100 and 26.200.

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