This decision, announced after a two-day meeting ending on June 13 (Vietnam time), aligns with market expectations. However, the comments from Fed Chairman Jerome Powell and the latest interest rate forecasts provided some surprises.

Jerome Powell noted that while inflation has decreased significantly, it remains elevated. The Fed reaffirmed its long-term inflation target of 2% and highlighted the strength of the US economy and labor market. Powell indicated that if the economy continues to perform well and inflation stays high, interest rates will remain elevated for an extended period.

A significant revelation from the meeting was the dot-plot chart, which outlines the interest rate forecasts of FOMC members. The chart now predicts only one 25-basis-point rate cut in 2024, down from three cuts anticipated in the March meeting. This adjustment signals a more "hawkish" stance from Fed officials than the market had forecasted.

Earlier forecasts had suggested that with the Fed expected to cut rates 2-3 times in 2024, gold prices could reach $2,400-$2,500 per ounce, potentially climbing to $3,000 per ounce. This expectation pushed gold prices to $2,450 per ounce in April after the Fed's March meeting hinted at three rate cuts in 2024.

However, with the Fed now expected to cut rates only once in 2024, the USD is likely to remain strong, preventing a significant rise in gold prices in the latter half of 2024. 

This stability in gold prices supports the State Bank of Vietnam’s (SBV) efforts to maintain the price of SJC gold bars. Currently, the SBV sells SJC gold bars at nearly VND 77 million per tael, approximately VND 5.1 million higher than the converted world price.

The cautious approach by the Fed contrasts with other major central banks, such as the European Central Bank (ECB) and the Bank of Canada (BOC), which have cut interest rates earlier. This divergence has helped keep the USD at a high level, exerting downward pressure on international gold prices.

Despite the recent stability, the international financial market remains unpredictable. It is possible that the Fed could make significant policy shifts later this year. For now, the US economy is stable, with strong consumer spending and a labor market that has largely returned to pre-COVID-19 conditions.

Investors and the Fed must consider the risks of acting too late in adjusting interest rates. However, the current consensus is that it is not yet time to lower rates.

Manh Ha