The Day at a Glance | August 28 2020

The Top

· FED will allow higher inflation and lower levels of unemployment before restricting the monetary policy.

· Japan`s Prime Minister Shinzo Abe resigns due to health reasons.

· Recovery regarding consumption in the US cools down even though it continues to exceed estimates (1.9% monthly in July); incomes grew 0.4% against expectations of a contraction.

Economic environment

Chair of the Federal Reserve Jerome Powell confirmed a change regarding the central bank`s monetary policy strategy, which will allow inflation levels to go above 2% and will wait for lower unemployment levels before considering full employment has been reached. These measures suggest that the interest rates will remain low for a longer period of time even though Powell assured the FED could act if inflationary expectations are significantly adjusted upwards. Markets expect to see the FED carry out concrete measures to reach a rate of inflation above 2% and expectations are beginning to focus on possible increases concerning the asset purchasing programs in its next meeting scheduled to take place September 15-16 as well as changing its statement with respect to the permanence of interest rates at current levels. This news has reinforced the dollar`s weakness at a global level.

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