THE Philippine Stock Exchange (PSE) rose sharply after the US Federal Reserve kept rates steady and signaled that it may cut rates next year.
The PSE index (PSEi) was up 2.47 percent at the end of Thursday’s trading settling at 6,410.48 while the broader All Shares index climbed 1.67 percent to close at 3,394.96.
Philippine stocks tracked Wall Street which surged after the Fed’s decision, with the Dow Jones Industrial Average closing at an all-time high.
Asian markets also rallied Thursday where Hong Kong, Sydney, Seoul, Singapore, Taipei, Bangkok, Mumbai, and Jakarta all climbed.
A local analyst however doubts the PSEI’s surge was likely to be sustained.
“This could be more of a technical rebound, realizing that the Fed is probably hinting that we may have seen peak rates,” said Jonathan Ravelas, managing director of E-Management for Business and Marketing Services.
While the Fed may have already seen “peak rates” at 5.25 percent and 5.50 percent with inflation around 3 percent, the Philippines’ inflation rate remains elevated.
Ravelas said Thursday’s rally was in line with his earlier forecast of a year-end level of around 6,300 for the PSEi.
For 2024, Ravelas said the PSEi would likely settle around the 7,000 level.
“We’re not out of the woods,” Ravelas said, noting that inflation remains a big concern for policymakers in the Philippines.
The Bangko Sentral ng Pilipinas (BSP) earlier said the balance of risks to the inflation outlook still leans significantly toward the upside.
The BSP’s latest risk-adjusted inflation forecast for 2024 is 4.2 percent, down from 4.4 percent in the previous meeting in November.
This however is still above the government’s target range of 2 percent to 4 percent.
“For 2025, the risk-adjusted inflation forecast is unchanged at 3.4 percent,” the BSP said.
In its last policy-setting meeting for 2023, the BSP kept rates steady. (ABS-CBN News)
