Philippine stocks, peso down on another U.S. Fed hike
MANILA, Philippines – The country's financial markets closed lower on Thursday, June 15, after the United States Federal Reserve hiked interest rates for the 2nd time this year – a move widely expected by economists and investors.
The Philippine Stock Exchange index (PSEi) settled at 7,964.49, down by 1.52 points or 0.02%. The broader All Shares eased by 1.49 points or 0.03% lower to 4,727.56 points.
The Philippine peso, meanwhile, shed 12.5 centavos, ending the day at P49.630 versus the greenback. This is lower than the P49.505:$1 close on Wednesday, June 14. (READ: How a Fed rate hike impacts the Philippine economy)
"The Federal Open Market Committee's (FOMC) decision was the primary market mover today. The impact of [its] decision was likely tempered by weaker-than-expected US reports on inflation and retail sales," Land Bank of the Philippines market economist Guian Angelo Dumalagan said in an email correspondence.
The US Federal Reserve raised its benchmark interest rate by a quarter point to 1.0%-1.25% and signaled another increase this year, despite the recent spate of weak economic data.
"The market decided to sell a bit on news today, as the decision was expected. The [FOMC's] statement included modest upgrades to its description of growth but indicated decline in inflation and unemployment rate, and moderation in job growth," Luis Limlingan, head of sales at Regina Capital Development Corporation, said in a text message.
PH seen to keep rates
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) is seen to keep interest rates steady next week despite the 3rd rate hike by the US Federal Reserve in 7 months.
Outgoing BSP Governor Amando Tetangco Jr told reporters in a text message that the decision of the US central bank didn't come as a surprise.
"The Fed's action was broadly anticipated by the market and reflects the positive outlook of the Fed on the US economy and labor conditions. It also laid plans for shrinking its balance sheet, which gives the market another glimpse of the normalization process," Tetangco said.
Since December 2016, the US Federal Reserve has raised interest rates by a total of 75 basis points, hinting 2 to 3 rate increases this year alone.
Tetangco is set to preside over his last rate-setting meeting as chairman of the Monetary Board on June 22, as his unprecedented two 6-year terms will end in July. BSP Deputy Governor Nestor Espenilla Jr will succeed Tetangco. (WATCH: Rappler Talk: Incoming BSP Governor Nestor Espenilla on his plans) – Rappler.com