Fex officials: Higher rates a must for inflation goal

THREE Federal Reserve officials last Monday said policymakers will need to raise interest rates further this year to bring inflation back to the central bank’s goal.

“We’ve made a lot of progress in monetary policy, the work that we need to do, over the last year,” Federal Reserve Vice Chair for Supervision Michael Barr told a Bipartisan Policy Center meeting on Monday. “I would say we’re close, but we still have a bit of work to do.”

The Fed held interest rates steady in June after raising them for 10 straight meetings to a range of 5 percent to 5.25 percent. Most policymakers expect to increase rates by a further half percentage point by the end of the year, according to projections released after their June gathering.

“We’re likely to need a couple more rate hikes over the course of this year to really bring inflation back into a path that’s along a sustainable 2-percent path,” San Francisco Fed President Mary Daly said at the Brookings Institution in Washington.

Cleveland Fed chief Loretta Mester, speaking at an event hosted by

➜ Bank arm donates school building SECURITY Bank Foundation Inc. (SBFI) announced it has turned over its first ever school building with a science laboratory to San Jose City National High School located in Nueva Ecija province. Two classrooms have been customized as science laboratories as the intended users are students under the special science program, the University of California, San Diego, said her own view also “accords with” Fed officials’ median forecast for two more rate increases.

“In order to ensure that inflation is on a sustainable and timely path back to 2 percent, my view is that the funds rate will need to move up somewhat further from its current level and then hold there for a while as we accumulate more information on how the economy is evolving,” she said.

Balancing risks

THE FOMC next meets July 25-26 and is widely expected to resume rate increases at that meeting.

Daly said the risks of doing too little to curb inflation still outweigh the risks of doing too much, though the gap between those two is narrowing. The San Francisco Fed chief said she is starting to see signs of the economy slowing, and added that supply and demand are coming into better balance.

A July 7 report from the Bureau of Labor Statistics showed job growth slowed last month, though pay gains remained robust. Mester said the current rate of wage growth

SBFI Trustee Melissa R. Aquino was quoted in a statement as saying. The two-story, 10-classroom structure is one of the most expensive school buildings donated by SBFI to date. The organization didn’t say how much it spent for the construction.

Since 2011, SBFI has been supporting the quest of Philippine public schools in advancing the quality of basic education. There have been 655 classrooms turned over in 117 schools in is still “well above the level consistent with 2 percent inflation given current estimates of trend productivity growth.”

New York Fed President John Williams told the Financial Times that while the jobs market remains strong, he sees signs of slowing in the direction of labor demand. An increase in unemployment and a further easing of demand will be needed to bring inflation back to target, he said.

“My own forecasts would have the unemployment rate rising to around 4 percent by the end of the year and getting up to 4.5 percent by the end of next year,” he told the FT in an interview. The jobless rate edged down to 3.6 percent in June from 3.7 percent.

Williams said the Fed had to act aggressively last year to assure the public that it would achieve price stability in a timely fashion.

“How quickly we moved from expansionary policy to restrictive policy, and now we’ve indicated through our projections and our communications that we think we still have some ways to go to get the policy to this sufficiently restrictive stance

68 cities and municipalities.

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Given this, Habito said fixing the MUP will be difficult. He recommended “some kind of transition” be put in place. “Now that we’re trying to fix that picture, there has to be some kind of transition that will assure the financial solvency of both the government and the MUP plan itself. It’s going to be a very difficult process. We have to get there, we have to make the first step,” Habito said.

Earlier, House Committee on Ways and Means Chairman Jose Ma. Clemente “Joey” S. Salceda warned there will be “graver concerns than a mass retirement” if the government runs out of funds to support the MUP’s pension. Salceda added that soldiers, policemen and firefighters will seek early retirement due to proposed MUP pension reform. Finance Undersecretary Maria Luwalhati C. Dorotan-Tiuseco said the economic team is still drafting the governance structure of the MUP pension fund.

Meanwhile, Defense Secretary Gilbert C. Teodoro Jr. has “emphasized” the need for “expert” fund managers in handling the fund.

A statement issued by the Department of Finance (DOF) said a key issue discussed during the meeting between the Marcos administration’s economic team and the leadership of the Department of National Defense was the governance structure of the MUP pension fund. The DOF earlier disclosed that the MUP pension fund will be managed by the Government Service Insurance System along with an oversight committee.

Bohol in tourism run but El Niño threatens

BOHOL island is on a major “run” in tourism, its flagship industry, pushed by the “revenge travel” phenomenon and big investor enthusiasm.

Already, one of the most preferred destinations in the Philippines, Bohol got a big shot in the arm this year when it was declared the “first Global Geopark” in the country, joining a short list of only less than 200 sites in 48 countries by the United Nations Educational Scientific and Cultural Organization. It is expected to generate intense new tourist interest.

Every month a new resort opens on the island-both big and small. The biggest to join this year is the Marriot Hotel (with the Cebu -based Apple One Properties Inc.), which will be the first 5-star hotel in Bohol located on Panglao island.

threaten the water levels in its four water dams, namely, Malinao, Bayongan, Caraga and Zamora.

Already the Provincial Agriculturist Office projects, so far, P110 million in losses in actual crop damage and lost opportunities as farmers refuse to plant for fear of losses due to lack of rain and water.

to get inflation to 2 percent, all of those reflect a commitment to get price stability not in over 10 years, but over a few years,” Williams said.

Core inflation remains a concern for the Fed. While the personal consumption expenditures price index rose in May at the slowest annual pace in more than two years, PCE minus food and energy climbed an annual 4.6 percent in May, suggesting underlying inflation remains sticky.

“Inflation is our No. 1 problem,” Daly said.

Fed officials will also receive new inflation data this week, with the Wednesday release of a monthly BLS report on consumer prices. Forecasters surveyed by Bloomberg expect it to show prices excluding food and energy advanced 0.3 percent last month, with the year-overyear rate of increase moderating to 5 percent, according to the median estimate.

Atlanta Fed President Raphael Bostic said that while the rate of inflation is too high, policymakers can be patient for now amid evidence of an economic slowdown— a stance at odds with many of his colleagues. Bloomberg News among the top-3 best performers in the local insurance industry. The firm said it also beat the industry’s total GWP performance, which fell by 0.5 percent YOY. It ranked third in new business annual premium equivalent, the insurance industry performance metric used globally and adopted by the Insurance Commission. For 2022, the company posted a 22-percent growth to P4.7 billion, outpacing the industry’s 4

This followed the announcement of an ambitious 57-hectare 10-year P25-billion “resort town” development—a “mini-city” in the heart of the island—developed by the Alturas Group Panglao Shores in Bolod, Panglao. The group already operates the South Palms Resort currently.

In 2019, just before the pandemic, Bohol posted a record-breaking 1.6 million tourist entries (both locals and foreigners) but was stymied by the entry of the pandemic. However, from January to May this year, tourists recorded a 129-percent rise from a similar period in 2022 or 326,306 from 155,014. The Bohol Tourism Office expects that for the whole of 2023, tourists would total close to a million.

In terms of foreigners, Korea tops the list of entrants in Bohol, followed by Taiwan, the USA, China and France. Korea operates three daily flights landing at the Panglao Bohol International Airport through Jeju Air and Air Busan bringing in up to 600 Koreans daily. To such an extent that in some favored restaurants, often there are more Koreans than locals frequenting the place daily.

A damper to this gung-ho atmosphere in tourism, however, is the slump in agriculture where 41 of the 47 towns, so far (involving 71 hectares) suffered huge losses due to the extremely warm weather. The onset of El Niño will definitely percent during the period.

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The provincial government led by Gov. Erico Aristotle C. Aumentado, through the recommendation of the Provincial Risk Reduction Management Council, is set to declare a “state of calamity,” which will automatically fund the release of the “Calamity Funds.”

Some 70 percent of the funds will be for preparedness and disaster mitigation while 30 percent go to actual disaster response. Among the first responses will be the proposed P10-million cloud-seeding program to induce rain to fall during the El Niño onslaught.

The telltale signs were seen last April with the nature-induced “ grass fire” across three municipalities that lasted for 16 hours and that gobbled up in flames 200 hectares of grassland.

The Bohol tourist boom will, therefore, somehow be clouded by the incoming El Niño that brings drought, then food scarcity and, therefore, escalating prices for tourists and locals alike.

El Niño is a weather phenomenon that causes weak winds from the east and prevents the formation of clouds over the Philippine archipelago and scatters the rain instead over the vast Pacific Ocean. Boholanos, however, are expecting El Niño would be a short-term curse while the tourism boom will be final and lasting.

Zoilo P. Dejaresco III, a former banker, is a financial consultant and media practitioner. He is a Life and Media member of Finx. His views here, however, are personal and do not necessarily reflect those of Finex and the Business Mirror. Email: dejarescobingo@yahoo.com.

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