How inflation risks affect stock prices?
It is a common notion that when interest rates increase, the stock market tends to fall because fixed income securities become more attractive due to higher yields.
The recent market correction in the PSE Index, which wiped out all the gains made last month, was caused apparently by fears of rising interest rates stemming from possible rate hike in the US. This was aggravated by the January inflation of 4 percent, was the highest in three years.
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