Market remains stable despite Fed rate hike

By Jed Jaleco Del Rosario

Monday, March 20, 2017

ILOILO City – The US Federal Reserve recently raised interest rates to 1 percent which caused fluctuations throughout various major markets worlwide, including the Philippine stock market, said Ilonggo technical analyst Hernan Segovia.

However, despite the bad publicity, the Fed rate hike had mixed results in the Philippine stock market, mainly due to assurances from the Federal Reserve that future rate hikes are unlikely to take place in the near future.

“It [interest rate hikes] means that the cost of interest rates go higher, and the cost of business goes up too,” explained Segovia. “However, the Federal Reserve argued that the rate hike was good for the (US) economy, and that no further rate hike will be implemented in the next few months. So the effects of the rate hike has largely abated, and the (Philippine and US) markets reacted positively because there will be no further rate hike for now.” 

“So for now, the overhang has abated, because the Federal Reserve has given us guidance on what they intend to do next,” Segovia said. “I don’t think there will be a rate hike unless we encounter sudden surprises.”

However, Segovia added that if the US Federal Reserve decides to raise interest rates again, it can have potentially bad repercussions for the Philippine market.

 

“If the Federal Reserve indicates that they will implement a rate hike in the coming months, such announcements could potentially be bad for the Philippine stock market,” he said./PN