The possibility of the Fed cutting interest rates and forecast for Vietnamese stocks

Investors are focusing their attention on the ongoing Fed interest rate meeting. The results are expected to be announced in the early morning of September 18 (Vietnam time).

Investors are cautious ahead of the Fed's policy meeting - Photo: QUANG DINH

According to CME's FedWatch tool, the market is pricing in a 90% chance that the Fed will cut interest rates by 25 basis points. The USD Index (DXY) is also under pressure from tensions between President Trump and Fed leadership. In August, President Trump announced the dismissal of Fed Governor Lisa Cook.

The move was considered unprecedented and further undermined confidence in US assets and the Fed's ability to operate independently. By the end of the month, the DXY index fell 1.4% from the beginning of the month to 97.7 (-10.6% compared to the beginning of the year).

Speaking with Tuoi Tre Online , Mr. Le Tien Dat - analyst and researcher at Agribank Securities - said that Vietnam expects the Fed's interest rate cut to help narrow the interest rate gap and reduce pressure on exchange rates.

How does the Fed's decision affect Vietnam?

Mr. Dat believes that the Fed's interest rate cut will theoretically reduce the expected yield difference of USD assets compared to emerging markets, thereby encouraging capital flows back to markets like Vietnam.

With Vietnamese enterprises having a large demand for importing production materials to serve domestic and foreign needs, the decrease in exchange rate also helps reduce cost pressure for manufacturing enterprises with high demand for USD.

On the other hand, from a market psychology perspective, the signal of the Fed cutting interest rates also shows that the trend of global policy easing continues, thereby supporting investor confidence and creating room for financial asset prices to maintain an upward momentum in the medium and long term.

Although the theory is positive, the key conclusion is still whether the Vietnamese market has reflected it?

Mr. Dat believes that it is difficult to accurately quantify the level of market support from the Fed's interest rate cut. In fact, this expectation has been partly reflected in the strong increase of Vietnamese stocks in August 2025, along with positive information such as the forecast of 8-10% GDP or the possibility of upgrading the market.

According to him, the positive impact in the short term will not be large, but in the medium and long term, the Fed's easing policy will strengthen investor sentiment, supporting the upward trend. Some sectors such as securities, import production and logistics can clearly benefit.

What risks should be considered, is it a no-reduction or a sharp decrease that is worth worrying about?

Not only are there positive forecasts, in a negative scenario, although the probability is very low, if the Fed does not cut interest rates in this meeting, it could create a headwind for the market, according to Mr. Dat.

Another risk is that if the Fed cuts interest rates too quickly, beyond investors' expectations, it could reflect instability in the economy , thereby creating a fear effect on the market.

Mr. Dat gave a typical example in early 2020, when the Fed cut interest rates sharply to support the economy in the context of the COVID-19 outbreak, the market fell sharply despite the interest rate adjustment.

Therefore, experts say investors need to pay attention to portfolio risk management, especially when there is an impact from the third quarter derivative maturity and ETF restructuring in the last two trading sessions of the week.

Will low interest rates be maintained?

According to Ms. Tran Thi Khanh Hien - Research Director of MB Securities (MBS), by the end of the year, deposit interest rates are expected to be under pressure from high credit growth rates.

However, in July, the State Bank also continued to require credit institutions to synchronously deploy solutions to stabilize and strive to reduce deposit interest rates, contributing to stabilizing the monetary market and creating room to reduce lending interest rates.

This, coupled with expectations of a 50 basis point Fed rate cut in the second half of 2025, will help narrow the VND-USD interest rate differential, thereby creating conditions for State Bank maintain a low interest rate environment.

Based on the above factors, MBS forecasts that 12-month deposit interest rates of private commercial banks will have room to decrease slightly by 2 basis points, to 4.7% by the end of 2025.

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BINH KHANH

Source: https://tuoitre.vn/kha-nang-fed-giam-lai-suat-va-du-bao-cho-chung-khoan-viet-nam-20250917180720993.htm