Stock investors were a bit shocked when the Philippine Statistics Authority (PSA) announced on February 7, 2023 that the country’s inflation rate in January hit a high of 8.7 percent, which was an increase compared to the 8.1 percent in December 2022.

“The largest item that has the biggest weight in housing, water, electricity, gas and other fuels is the rental, housing rental. Because of the opening up of the economy, (in) January, I think they have adjusted the rates,” said PSA  Undersecretary Dennis Mapa in a press conference.

This forced the Bangko Sentral ng Pilipinas (BSP)-Monetary Board to raise policy rates on February 16, 2023 to help slow down inflation.

“In deciding to raise the policy interest rate anew, the Monetary Board noted that the latest baseline inflation forecast path has shifted higher relative to the previous assessment,” said Felipe Medalla, who served as BSP government from June 2022 to June 2023, on February 16, 2023.

And while inflation slowed down to 8.6 percent in February, the BSP announced another policy rate hike on March 23, 2023.

The high inflation rates in January and February, and the BSP responding by announcing policy rates in February and March were the major factor that resulted in the PSEi closing at lower levels from February to March.

Other factors were cited like the collapse of United States-based Silicon Valley Bank that sparked rumors of more banks closing down in the US.

“Philippine shares fell below the 6,500 support as investors bet the collapse at Silicon Valley Bank could be the start of more banking headwinds in the US,” Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales, said on March 14, 2023.

The US Federal Reserve also hiked policy rates in the United States on February 1 and March 22, 2023, which added to the negative sentiment in the stock market.

In February 2023, the PSEi average was 6,816.43 points, or a 1.38-percent drop from the 6,910.85-point average of January.

In March, the PSEi average was 6,569.17 points, or a bigger 3.76-percent drop from the stock index average of February.