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Overseas news
US President Donald Trump raised tariffs on Canadian goods to 35% from 25%. This was in response to Canada’s “inaction” to curb the flow of illegal drugs to the US.
The higher rate will take effect on August 1, 2025 but will exclude goods covered by the US-Mexico-Canada free trade agreement.
Investors have been closely watching the Trump administration’s tariff decisions due to their potential impact on the prices of goods and services as well as global economic growth.
Meanwhile, the Bank of Japan (BOJ) kept its policy rate at 0.5% on Thursday amid higher inflation forecasts and the need to assess the impact of US tariffs.
Changes in interest rates matter to investors since they influence loan and deposit rates, bond yields, and even the performance of other asset classes such as stocks.
Local developments
Headline inflation in July is forecasted to land within the 0.5%-1.3% range, according to the Bangko Sentral ng Pilipinas (BSP).
The BSP expects an inflation slowdown due to a continuous decline in rice prices, which may have offset the rise in the prices of other consumer goods and services.
Headline inflation looks at price changes of the Consumer Price Index (CPI). This is a standard “basket” of goods and services that a typical family spends on.
Meanwhile, the Department of Finance (DOF) expects infrastructure spending to pick up in Q3 after a pause during the first half of Q2 due to election-related spending restrictions.
Higher infrastructure spending may have positive effects on the economy by creating jobs and promoting growth in industries and locations affected by the developments. The new structures may also help promote growth in their localities.
Additionally, the peso weakened to the 58-level against the US dollar on Thursday. This happened following a stronger-than-expected Q2 US gross domestic product (GDP) figure and as the US Federal Reserve (the Fed) held interest rates steady.
Lower interest rates tend to weaken a country’s currency as investors look for higher returns elsewhere, and so slower Fed rate cuts may allow the dollar to maintain its strength against other currencies like the peso.
The mixed news today doesn’t provide sure signs of what’s going to happen next. Given that, you may want to avoid making big changes to your portfolio for now.
