Inflation sets mood yet again for anxious PH investors

Investors are bracing for a busy week with the upcoming release of US inflation and the Bangko Sentral ng Pilipinas’ (BSP) interest rate-setting meeting on Thursday.

Potential market movers also include the release of fourth quarter 2022 corporate earnings and the MSCI Index rebalancing.

The benchmark Philippine Stock Exchange Index (PSEi) ended the previous week lower by 2.14 percent to 6,876.79 after inflation in January heated up to 8.7 percent, which was above expectations.

The US will also release its latest inflation data on Feb. 14 while the BSP policy meeting was set for Feb. 16.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said a 25-basis point interest rate hike was expected “to at least match the latest +0.25 Fed rate hike” last Feb. 1.

He said immediate support levels for the PSEi were from 6,790 to 6,580 while resistance levels were from 7,000 to 7,100.

HSBC Global Research Asean economist Aris Dacanay expects a larger 50-basis point hike on Thursday while raising the country’s inflation forecast for the year.

“The big upside surprise in January has set the tone for the inflation outlook for the rest of the year. We therefore raise our 2023 inflation forecast to 5.7 percent from 5 percent, but our 2024 forecast remains unchanged at 3.6 percent,” he said, taking note of the “eye-watering” January print.

“All these numbers suggest that the policy rate outlook is more than just following the Fed in lock step. It is also about the Philippines facing an inflation problem of its own,” Dacanay added. —Miguel R. Camus INQ