Philippine Market Outlook March 22, 2019

MARKET OUTLOOK

Local shares jumped on Thursday along with most of regional markets as investors cheered the US Federal Reserve’s decision to keep interest rates steady.

Mainly, it’s the dovish move by the US Federal Reserve wherein they abandoned their increase in interest rate policy due to no movements in inflation rate.

The US Federal Reserve decided to keep interest rates within the 2.25% to 2.5% range during its two-day policy meeting. It also changed its 2019 outlook to no policy movement after two increases projected back in December, pointing to the slower economic growth in Q4 of 2018.

This will favor the Philippine market as this will provide liquidity on low rates for its expansionary program such as infrastructure, government, as well as private sector spending, etc.

With the FOMC (Federal Open Market Committee) indicating no further rate hikes in 2019, investors bought into local shares ahead of the central bank meeting.

The central bank decided to keep interest rates steady during its Monetary Board meeting on Thursday, although this was announced after the market’s 3:30 p.m. close.

The Monetary Board’s decision is based on its assessment that prevailing monetary policy settings remain appropriate.

Inflation pressures have eased further since the previous monetary policy meeting, reflecting mainly the decline in food prices amid improved supply conditions.

The market should maybe be a bit more measured in extrapolating too much from the Fed's dovish stance because that could change.