Volatile trading seen as market awaits BSP meet

THE STOCK MARKET may see volatile trading when trading resumes on Wednesday as investors await the Philippine central bank’s policy decision.

On Monday, the Philippine Stock Exchange index (PSEi) dropped by 0.25% or 16.03 points to close at 6,368.55, while the broader all-share index decreased 0.92% or 32.97 points to end at 3,527.29.

Philippine financial markets were closed on Tuesday (Feb. 17) for the Lunar New Year holiday.

Analysts said market players could move cautiously as they await the Bangko Sentral ng Pilipinas’ (BSP) policy statement on Thursday for hints on its easing path.

“Activity will be compressed into a shortened week, which could amplify volatility ahead of Thursday’s BSP policy decision. The expected 25-bp (basis point) cut is largely priced in, so the market’s reaction will likely depend more on the tone of the BSP’s guidance,” F. Yap Securities, Inc. investment analyst Marky Carunungan said in a Viber message.

He said the PSEi may trade within the 6,300-6,450 range for the rest of the week, with movements to depend on the central bank’s policy hints.

“A dovish tone signaling further easing could push the index toward the upper end of that band, while a more neutral tone may trigger short-term profit taking back toward 6,250-6,300,” he added.

“Overall, we anticipate cautious positioning and range-bound trading, with investors waiting for clearer signals on the path of rates before taking stronger directional bets.”

Trading volumes could be thin on Wednesday as some institutional investors could still be on holiday mode, AP Securities analyst Shawn Ray R. Atienza said in a Viber message.

“We expect local investors to position ahead of the Monetary Board meeting, where the BSP is widely seen to deliver another 25-bp cut as the dollar’s depreciation could cushion pressures induced by the narrowing interest rate differential between the US and our country,” he said.

The BSP is widely expected to deliver a sixth straight cut at its meeting on Thursday to support a weakening economy as inflation remains manageable. All analysts in a BusinessWorld poll see the Monetary Board lowering benchmark interest rates by 25 bps this week to bring the policy rate to 4.25%.

In 2025, the central bank cut borrowing costs by 125 bps via five consecutive cuts. This brought its cumulative reductions since August 2024 to 200 bps.

BSP Governor Eli M. Remolona, Jr. has left the door open for further easing to support domestic demand, but reiterated that price stability remains their primary mandate and their easing cycle is nearing its end.

Headline inflation picked up to 2% in January from 1.8% in December. It marked the first time in nearly a year that inflation was within the central bank’s 2%-4% annual target. — Alexandria Grace C. Magno