ILOILO City – Last week, the United States Federal Reserve cut the benchmark federal funds rate by 0.25 percent, the first time in a decade according to many reports. Rate cuts are usually carried out whenever economic growth is slowing down in the United States by releasing new capital to stimulate the economy.
Despite the major implications of last week’s Fed rate cut, it had little to no effect on the Philippine economy, reports local stock broker Hernan Segovia. The PSEi had closed at around 8,100 points last week, and was barely affected by either US markets or regional markets.
“Despite the much anticipated Fed action – because they cut rate last Thursday – the market just shrugged it off a bit. But other regional markets, such as China and Hong Kong, have their own particular weakness like the protests there,” Segovia said.
“Actually, there’s nothing much to correlate as of this time whether the regional impact has an impact on the Philippine market, except we await for further economic data and the reaction of the BSP rate cut towards next week.”
Due to the rate cut, the US dollar became stronger last week, but had marginal effects on the stock market. Segovia, though, believed that this is only a temporary setback and argued that the peso will return to its previous strength this week./PN
