Powell ends rallyIn the past month, financial markets staged a strong rally, fueled by hopes that the Federal Reserve (Fed) will dial down its ultra-hawkish policy stance. Powell telegraphed that interest rates would stay higher for longer in order to bring down inflation. Medalla emphasized the need to maintain the interest rate differential that was prevailing before the most recent Fed rate hike. He explained that the BSP’s telegraphed rate hike would support price stability and the need to temper sharp peso depreciation. Higher interest rates maintained for an extended duration may exacerbate the ongoing weakness in major economies and precipitate a deep global recession.
