Market Highlight 21.05.2026

The Minutes of the FED’s April meeting showed growing support for raising interest rates if inflation remains persistent. At the same time, the war in the Middle East and the AI boom have reshaped the interest-rate outlook ahead of the leadership transition at the FED. Policymakers at the U.S Federal Reserve have now largely moved past the question that dominated their debates over the past two years - whether rates should be cut - and began more seriously at last month’s meeting to consider the opposite: whether rates may need to be raised. According to the Minutes of the April policy meeting released early this morning, most members acknowledged that further tightening could become necessary if inflation continues to remain above the 2% target. The direct trigger behind this reassessment by both the FED and the market was the war in Iran, which has pushed energy prices higher and threatens to drive inflation above the Central Bank’s 2% objective. Strong U.S economic growth has reinforced expectations of higher rates, while a stable labor market has reduced the urgency for rate cuts.

Meanwhile, the U.S labor market has become more stable, while the inflationary effects of the AI boom are becoming more apparent. Once expected to help cool inflation by boosting productivity, AI is now increasingly resembling a short-term source of demand and is contributing to overheating in investment, as hundreds of billions of USD are being poured into building data centers. The sharp rise in technology stocks has also supported household spending, rather than delivering the cost savings that had been expected from wider AI adoption.

The USD fell 0,2% on Wednesday from its six-week high, as growing expectations that the U.S is close to reaching an agreement with Iran to end the war in the Middle East weighed on the currency. Domestically, interbank USD/VND rebounded late yesterday and closed near 26.370.

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