Investors in the stock market are gearing up for the Bangko Sentral ng Pilipinas’ (BSP) upcoming policy meeting on Thursday, as they also analyze the latest corporate earnings for the second quarter.
The benchmark Philippine Stock Exchange index (PSEi) has been on a downtrend since the disappointing economic growth data for the second quarter was released by the government last week. The PSEi fell 0.7 percent to 6,405.91 compared to the previous week.
Michael Ricafort, the chief economist at the Rizal Commercial Banking Corp., noted that the PSEi is currently hovering just above the major support zone of 6,400 to 6,250. He identified the key resistance areas for the PSEi as 6,730 to 6,830.
The upcoming interest rate setting meeting of the BSP Monetary Board will take into account several data points.
One of the main considerations is the recent July inflation report, which showed a cooling inflation rate for six consecutive months, reaching 4.7 percent.
HSBC Asean economist Aris Dacanay maintains their expectation that the BSP will maintain its policy rate at 6.25 percent on August 17.
“Although the second quarter Philippine economic growth surprised on the downside, we believe that the risks to inflation and policy rate outlooks are on the upside,” Dacanay said.
“To some extent, the cooling of growth may also contribute to macroeconomic stability and restore domestic balance. Despite marginal improvement, the national saving rate has not yet returned to pre-pandemic levels, while investment remains strong,” he added.
“This imbalance may necessitate a tighter monetary stance to control demand, promote saving, and restore balance to the domestic economy,” he concluded.
—Miguel R. Camus INQ
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