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1. US Federal Reserve says tariffs likely to make inflation worse
During a speech at the Economic Club of Chicago on Wednesday, U.S. Federal Reserve Chair Jerome Powell said the tariffs imposed by Donald Trump likely will worsen U.S. inflation and that those “announced so far go well beyond what the Fed had expected even in its worst-case scenario,” according to The New York Times. Powell has recently warned that the “levies of the scope and scale Trump was pursuing would most likely lead to even higher inflation and slower growth than initially expected — the makings of what’s known as a stagflationary shock.”
Powell added that the Federal Reserve would have to make “what will no doubt be a very difficult judgment about which of its goals to prioritize.” His comments, the newspaper suggested, might have led to the S&P 500 ending the day down more than 2%, adding that “U.S. government bonds rallied, while the dollar continued to weaken against a basket of major currencies.”
2. Japanese competition authority warns hoteliers over 'cartel behavior'
Japan’s competition and monopolies antitrust body, The Japan Fair Trade Commission, has notified “15 operators of high-end Tokyo hotels” over what it says is “cartel behavior.” The commission called out activity it regards as being uncompetitive for consumers, tactics such as “communicating their respective room prices and occupancy rates” to each other, according to Nikkei Asian Review and Tokyo newspaper Mainichi.
Due to a weak Japanese yen, the number of inbound guests has increased notably, which has resulted in soaring average daily rate. The JFTC said it will soon issue administrative guidance, but a source quoted by the newspaper added the organization’s “probe did not allege cartel-like collusion, such as collectively raising or setting room rates, and … the gatherings [of hoteliers] are no longer held.”
3. Bali alters tourism mix to protect culture, ends hotels moratorium
Bali, Indonesia, has reinvented itself with more emphasis on upscale tourism, sustainability and cultural preservation, writes Hotel News Now contributor Selena Oh. A hotel development moratorium has also been lifted by the region's new government.
The Indonesian government had declared a moratorium on new hotels, villas and restaurants to regulate tourism expansion, protect natural resources and negate the effects of rapid growth on local communities. Oh writes the moratorium was imposed due to “concerns arose over rising costs of living, increasing Western influence, environmental sustainability and cultural preservation of Balinese heritage.”
4. Canada and South Korea banks hold interest rates
The central banks of Canada and South Korea decided this week to keep interest rates steady. The pause replicates the wait-and-see approach of central banks in other nations in regards to U.S. tariffs, according to The Wall Street Journal. Tiff Macklem, the governor of the Bank of Canada, said his bank “will have to be more nimble in responding to U.S. trade-policy developments. … That means being less forward-looking than usual until the situation is clearer.”
South Korea’s central bank, Bank of Korea, kept its interest rate at 2.75%, the same rate as Canada. The WSJ added “Asia’s fourth-largest economy relies on exports for nearly half of its gross domestic product growth, leaving it exposed to trade disruptions from the sweeping US tariffs.”
5. Four Dublin councils move closer to imposing tourism tax
Four Dublin councils — Dublin City Council, Fingal, South Dublin and Dún Laoghaire Rathdown — have moved closer to officially imposing a tourism tax on hotels, according to The Irish Times. Dún Laoghaire Rathdown is close to joining the working group the three others have instigated. The levy is expected to go into operation in September.
Séamus McGrattan, chairman of Dublin City Council, said that “the overall message is that local authorities aren’t particularly well funded ... we have to look at other ideas.”
The Irish Hotels Federation opposes the tourism tax legislation, saying that its hotelier members are already making “an enormous contribution.” In Dublin, hotels pay approximately €1,000 per bedroom in commercial rates, which contributes €25 million a year. The hotels organization added the last thing hoteliers needed was more taxation and potentially fewer guests.