Analysis and Recommendation<\/h2>\n\n\n\n
However, market players noted a marked softening in the Fed\u2019s tone, as Powell dropped any reference to \u201cadditional policy firming\u201d which points to a higher possibility of a pause in rate hikes but falls short of a strong commitment. Further, the Fed Chair ruled out any rate cuts in the near future, deeming it to be not in line with the Fed\u2019s goal of bringing down inflation to 2% in the long run.<\/p>\n\n\n\n Powell moved to reassure markets that the US banking industry remained \u201csound and resilient\u201d following the failure of First Republic Bank over the weekend, two months after the back-to-back failure of Silicon Valley Bank and Signature Bank. The string of bank failures was widely seen as the direct result of the Fed\u2019s aggressive rate hikes, as falling bond prices inflict losses on banks with their assets locked in US Treasury bonds. Shares of regional banks tumbled following the Fed decision, and one market commentator said that the market is \u201cwaiting for the next domino to fall\u201d.<\/p>\n\n\n\n On the local front, we expect the Bangko Sentral ng Pilipinas to match the Fed\u2019s move with a 25 bps hike to preserve the interest rate parity and defend the peso from depreciation. However, we note that the BSP has been signaling a pause since April, and the BSP may be more committed to making this the last rate hike. A definite pause in tightening will be positive for the stock market, as removing the possibility of higher rates may make companies more confident to raise capital and map out expansion plans amidst a stable interest rate environment.<\/p>\n\n\n\n![\"\"](\"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-content\/uploads\/2023\/05\/Screenshot-2023-05-05-at-1.59.05-AM.png\" "\\"Screenshot-2023-05-05-at-1.59.05-AM\\"")
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