Operate with caution.
As expected by experts, the Fed decided to keep its benchmark interest rate unchanged at its June meeting last week. In its post-meeting statement, the Fed noted that the labor market remains strong and the unemployment rate remains low. Inflation has cooled over the past three months, but Fed Chairman Jerome Powell emphasized that this only reflects the past, while warning that inflation could reach 3% by the end of this year.
According to the Fed's dot chart, Federal Open Market Committee (FOMC) members still expect a total interest rate cut of 0.5 percentage points in 2025, but a majority believe the policy rate will only be reduced by another 0.5 percentage points by 2027. Investors are also heavily betting on the Fed cutting interest rates by another 25 basis points at its September meeting.
Although the conflict between Israel and Iran was not mentioned in the policy statement, the Fed chairman said that the situation is still being monitored. Energy price increases due to conflict are usually temporary and do not have a long-term impact on inflation, but the Fed may be prepared to respond promptly to new information.
Similarly, the Bank of England (BoE) also kept interest rates unchanged at 4.25% amid persistently high inflation in the country and increased external risks due to global trade tensions and conflicts in the Middle East.
Previously, the European Central Bank (ECB) had cut interest rates for the eighth time since June 2024, bringing the deposit rate down to 2%. However, in a recent message, ECB President Lagarde stated that the ECB is nearing the end of its cycle, indicating a possible pause after the recent series of cuts.
Meanwhile, the Swiss central bank cut its policy interest rate by 25 basis points, bringing it to 0% for the first time since negative interest rates were implemented at the end of 2022. Falling inflation and a gloomy global economic outlook were cited as reasons. Switzerland's consumer price index fell for the first time in four years, driven by lower travel and oil prices. Switzerland's GDP grew strongly in the first quarter of 2025, partly due to early exports to the US before new tariffs were imposed, but this growth is expected to slow in the coming quarters.
Exchange rate pressure
Continuing his strong reaction following the Fed's decision to keep interest rates unchanged, US President Donald Trump launched a series of fierce attacks on the Fed Chairman through posts on the social media platform Truth Social, calling for an immediate interest rate cut and accusing Chairman Powell of causing hundreds of billions of dollars in damage to the US economy by not lowering interest rates.
Meanwhile, the risk of high US interest rates and the uncertainty surrounding the outcome of tariff negotiations are also putting pressure on exchange rates in developing countries. The buying rate of VND/USD at commercial banks had approached 26,000 VND/USD by the end of last week.
At Vietcombank , the USD is traded at 25,922 VND/USD (buying rate for transfers) and 26,282 VND/USD (selling rate). The selling rate has been at its highest level throughout the previous week. Since the beginning of the second quarter, the exchange rate at Vietcombank has increased by 2.1%, significantly contributing to the overall increase of 2.86% compared to the end of 2024. The central exchange rate also recorded a corresponding increase.
According to analysts from MBS, the USD is expected to maintain its strength this year thanks to high levels of trade protectionism and high interest rates in the US, as the Fed is projected to cut interest rates only twice.
Furthermore, if the reciprocal tax remains high, it will pose a significant challenge to Vietnam's exports and foreign investment attraction, tightening the supply of foreign currency and putting additional pressure on the exchange rate. If both sides successfully negotiate a reduction in the tax rate, it will significantly contribute to stabilizing the exchange rate and interest rates, and strengthening key economic sectors such as exports and attracting foreign investment.
The content of future negotiations will be a major unknown factor impacting macroeconomic elements, including exchange rates. With less than 20 days remaining until the end of the 90-day temporary suspension of US tariffs, extending the tariff negotiations beyond the July 8 deadline is being discussed.
According to predictions from Goldman Sachs' economic experts, the US will extend the timeframe for tariff negotiations with other countries, instead of adhering to the original deadline. Previously, US Treasury Secretary Scott Bessent mentioned the possibility of allocating more time for trade negotiations and postponing deadlines with countries showing goodwill.
Amid increasing external pressure, the State Bank of Vietnam continues to implement flexible monetary policy measures. In May, the State Bank continued to conduct net withdrawals of over VND 21,400 billion. According to analysts from FiinRatings, the flexible adjustment of the central exchange rate allows the market more room for self-regulation.
Source: https://baodautu.vn/ty-gia-van-chiu-ap-luc-kep-d309887.html
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