Inflation in spotlight as PSEI holds on to 6,700

Stocks advanced the past week to close above 6,700 as investors prepared for the upcoming release of inflation data for January. The benchmark Philippine Stock Exchange Index (PSEi) added 0.32 percent last week to close at 6,707.25. Since the start of the year, the benchmark index has gained nearly 4 percent.

Jonathan Ravelas, veteran forecaster and senior adviser at Reyes Tacandong & Co., said January headline inflation could settle at 2.6 percent while core inflation was pegged at 3.9 percent.

The headline number was below the government’s forecast range of 2.8 percent to 3.6 percent.

Bank of the Philippine Islands (BPI) also expects inflation to moderate in the first three months due to a high base last year. Easing consumer prices might also trigger the Bangko Sentral ng Pilipinas to unwind elevated interest rates in the latter part of 2024.Timing

“Rate cuts are possible in the second half of the year once inflation is firmly within the target of the central bank. However, the timing of future rate cuts and their magnitude also depend on what the Federal Reserve will do,” BPI said.

“If local inflation conditions are right, the BSP will likely respond immediately with rate cuts once the Fed begins its easing cycle,” it added. Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the PSEi will need to sustain its current momentum before targeting the next resistance area at 7,000.

Meanwhile, immediate support for the PSEi could be found from 6,560 to 6,440, he said. —MIGUEL R. CAMUS INQ