Aurelia Butler

“Next meeting will focus on inflationary expectations in PH, not the Fed’s 25 bps rate increase,” Bangko Sentral ng Pilipinas Governor Felipe Medalla told reporters in a phone message. Philippine inflation was likely to be within a range of 7.5% to 8.3% in January, the central bank said on Tuesday, following the 8.1% rate in December, which was a 14-year high. The statistics agency will release inflation data on Feb. 7. More

By Elvira Pollina and Martin CoulterMILAN/LONDON (Reuters) – Italy’s Data Protection Agency said on Friday it was prohibiting artificial intelligence (AI) chatbot company Replika from using the personal data of Italian users, citing risks to minors and emotionally fragile people.Replika, a San Francisco startup launched in 2017, offers users customized avatars that talk and listen to them. It has led the way among English speakers, and is free to use, though it brings in around $2 million in monthly revenue from selling bonus features such as voice chats.The ‘virtual friend’ is marketed as being able to improve the emotional well-being of the user. But the Italian watchdog said that by intervening in the user’s mood, it “may increase the risks for individuals still in a developmental stage or in a state of emotional fragility”.Jen Persson, director of children’s privacy advocacy group Defend Digital Me, told Reuters that tools designed to influence a child’s mood or mental well-being ought to be classified as health products, and should therefore be subject to stringent safety standards. “These tools are being used with children without much oversight or protection from potential misuse,” she said. Italian regulators highlighted the absence of an age-verification mechanism, such as filters for minors or a blocking device if users do not explicitly state their age. Replika breaches European Privacy Regulations and processes personal data unlawfully as it cannot be based, even implicitly, on a contract that a minor is unable to sign, the watchdog said.Replika did not immediately respond to a Reuters email seeking comment.Robert Grosvenor, a managing director at consultancy firm Alvarez & Marsal, said the Italian watchdog was unlikely to be the only European regulator considering action against companies like Replika. “Whilst age verification could provide means to protect some of the most vulnerable groups, it does not address the risks and harms that AI-based services and solutions can raise if unregulated, in terms of the potential for unintended bias and discrimination,” he said. Replika’s developer, U.S. company Luka Inc, must notify the Italian authority of measures taken to implement its requirements in 20 days and could be fined up to 20 million euros ($21.80 million), or up to 4% of its global annual turnover, the statement said. (This story has been corrected to say Alvarez & Marsal is a consultancy firm, and not a law firm, in paragraph 11) More

(Reuters) – The U.S. Federal Reserve is likely to need to lift the benchmark rate above 5% and keep it there to squeeze too-high inflation out of an economy where the labor market remains strong even after nearly a year of the most aggressive round of Fed rate hikes in 40 years.That was the betting in financial markets on Friday after the U.S. Labor Department reported employers added more than half a million jobs last month, far more than expected, and the unemployment rate fell to 3.4%, the lowest in more than 50 years. That was also how San Francisco Fed President Mary Daly saw it. In December Fed policymakers thought they would likely need to lift rates to at least 5.1% this year to tame inflation, and that projection is still a “good indicator” for where policy is going, Daly told Fox Business Network. But, she added, “I’m prepared to do more than that, if more is needed.” For Daly and other Fed policymakers including Fed Chair Jerome Powell, the view is not new, and is especially not surprising in light of what Daly called the “wow” strength of January’s job gains. But for markets, it’s a turnaround. The Fed earlier this week increased its benchmark rate by a quarter-of-a-percentage-point to 4.5%-4.75%. In a news conference following the decision, Powell said that with the labor market still tight he expects to need “ongoing” increases to get monetary policy “sufficiently restrictive” to engineer a more balanced job market and bring down too-high inflation. Interest-rate futures traders, initially skeptical that with a disinflationary trend already underway the Fed would need more than a one further quarter point interest-rate increase in March, moved after Friday’s job report to price a further increase in May. That move would bring the policy rate to the 5%-5.25% range. Traders also pushed out their expectations for eventual Fed rate cuts after the jobs report, pricing them to start in November versus in September previously. Powell has said he does not expect inflation to fall fast enough to allow the Fed to cut rates at all this year.Friday’s Labor Department report did show slower growth in average hourly earnings to a 4.4% pace, from an upwardly revised 4.8% in December. “While the Fed welcomes any signs of easing wage pressures, the pace of growth in average hourly earnings is still too strong to help lower inflation,” Oxford Economics’ Ryan Sweet wrote. And it is progress on inflation that will drive the Fed’s policy decisions ahead, Daly said on Friday. By the Fed’s preferred gauge, inflation registered 5% in December, a slowdown from earlier in the year. But it’s too early to say that inflation has peaked, Daly warned. “The direction of policy is for additional tightening and in holding that restrictive stance for some time,” she said. “We really will have to be in a restrictive stance of policy until we truly understand and believe that inflation will come squarely back down to our 2% target.” More

NEW YORK (Reuters) – Much stronger-than-expected U.S. job growth stopped early-year rallies in stocks and bonds dead in their tracks on Friday, forcing Wall Street to recalibrate expectations for how much more hawkish the Federal Reserve will need to be in its fight against inflation.An unexpectedly dovish message from Fed Chair Jerome Powell earlier this week had emboldened investors looking for evidence of the so-called “soft landing” scenario that has fueled a market rally this year, in which the central bank can tame inflation without causing a recession. But Friday’s data, which showed U.S. employment growth accelerating sharply in January, renewed the inflation concerns that hammered stocks and bonds last year, reinforcing some investors’ belief that the twin gains in both asset classes may have gotten ahead of themselves. The S&P 500 index was down about 1% on Friday though still up 8% on the year. Yields on the benchmark 10-year Treasury, which move inversely to prices, gained 12 basis points despite having declined by 30 basis points this year.”This report gives us more confidence that the Fed’s got to keep going, and that increases at the margin the odds that we do have to deal with a recession at some point later this year,” said Michael Reynolds, vice president of investment strategy at Glenmede, who has been underweight equities while holding a larger allocation to fixed income and cash.Job growth and wages are a chief concern for the Fed in its attempt to lower inflation to its 2% target rate after it surged to 40-year highs last year. The Labor Department’s nonfarm payrolls report on Friday showed a gain of 517,000 jobs in January, almost three times what was expected.The reading quelled hopes that the U.S. central bank might stop its tightening cycle, which is the most aggressive since the 1980s, after delivering just one more rate hike in March.Goldman Sachs (NYSE:GS) said it continued to expect two more 25-basis-point hikes in March and May, while Morgan Stanley (NYSE:MS) on Friday changed its forecast for the so-called terminal rate to 4.875% from 4.75%.The Fed’s policy rate is currently in the 4.50%-4.75% range. According to CME Group (NASDAQ:CME) data, the probability of a 25-basis-point hike at the Fed’s March 21-22 policy meeting rose on Friday to around 95% from 83% just before the release of the jobs report. Those betting that the Fed might cut rates later this year also lost some conviction, with fed funds futures traders now expecting the policy rate to go down to 4.7% in December. Earlier this week, they anticipated a rate of 4.49%.”The report will make insurance cuts less likely as there are no material signs of stress to force a rate cut,” said Alexandra Wilson-Elizondo, head of multi-asset retail investing at Goldman Sachs Asset Management.”The data today reinforces our positioning where we continue to be cautious on risk as the inflation question is slowly coming back into the investment narrative,” she said. More