Overseas news
Chicago Federal Reserve Bank President Austan Goolsbee has said a 1970s-style stagflation is unlikely to happen with current conditions of unemployment nearing 4% and the falling 2.5% inflation.
However, he acknowledged the possibility of unemployment and inflation worsening simultaneously.
Stagflation happens when economic growth is slowing but the inflation rate is still rising. It notably occurred in the US in the 1970s, when both the inflation and unemployment rates grew significantly.
Such conditions can pose a challenge to policymakers like the US Federal Reserve (the Fed). They must decide what to do to possibly boost the economy while keeping prices from rising too high, too fast.
Local developments
Minimum wage earners in Metro Manila will receive a P50 daily wage increase starting July 18. This is the largest hike ever approved by the National Wages and Productivity Commission (NWPC).
This wage hike can help low-income earners deal with the rising costs of goods and services, although some people may worry about how such a pay increase might inadvertently contribute to inflation.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) estimates that June headline inflation likely fell between 1.1% and 1.9%, staying below their 2-4% target range.
The possible below-target inflation might give the central bank room to cut interest rates further.
Further, the BSP revised its balance of payments (BoP) deficit forecasts, now projecting a wider $6.3 billion deficit for 2025 due to global uncertainty. The central bank also expects a narrower $2.8-billion deficit for 2026.
BoP is the difference between the money entering a country and the amount leaving that country during a certain period.
The latest news shows no major changes, and so it may not be the right time to make big changes adjustments to your investing approach. You might want to stay cautious with your decisions as you wait for signs of sustained recovery.
