The Day at a Glance | February 11 2021

The Top

· There will be a monetary decision on behalf of the Central Bank of Mexico today (1:00 pm Mexico City time).

· Powell assures that the labor market is far from a total recovery; expansive fiscal and monetary policies provide support.

· European Commission revises growth estimate downwards in the Eurozone to 3.8% for 2021.

· Joe Biden has first telephone conversation with Xi Jinping; they talked about “disloyal economic practices” and interventions in Hong Kong, Taiwan and Xinjiang.

Economic environment

The Central Bank of Mexico will have its first monetary policy meeting of 2021 today. In recent days, doubts have come up regarding whether or not the central bank will cut the interest rate in 25 base points and take it to 4%, something that analysts and the market both expected to occur. However, recent inflationary figures have shown a rebound in prices and some statements made by members of the Governing Board suggest that discussions regarding what decision to make continue: cutting the interest rate or waiting for inflation to confirm its downwards trend after April. Galia Borja will participate in the meeting as Deputy Governor for the first time, which is believed will skew the meeting towards a more accommodative monetary policy and more focused on backing economic growth. The decision is expected to be made public a little after noon (1:00 pm Mexico City time) and the statement will be essential to understand Banxico`s monetary plans for the next months.

President Joe Biden had his first telephone conversation with his Chinese counterpart, Xi Jinping. According to the White House`s records of the conversation, Biden showed concern for disloyal practices in China regarding economic matters in addition to human rights violations in the Xinjiang region, the Chinese government`s intervention in Hong Kong and actions against Taiwan. Xi Jinping, on his part, assured that he will seek to reestablish mechanisms for dialogue and warned that a confrontation could be “disastrous”. Xi highlighted that Hong Kong, Xinjiang and Taiwan are national sovereignty and territorial integrity issues, and expects the US to respect Chinese interests and address said issues cautiously. Additionally, both presidents exchanged their points of view on issues related to the pandemic and climate change. Reports on the conversation suggest that China-US relations will not change radically during Biden`s administration. The US will continue to limit the exportation of high-tech goods and Chinese investment in order to defend its – and its allies` – interests; other than expecting tariffs imposed in previous years to remain in force. The relevant change will be seen in the form of relationship, through more diplomatic channels; but substantially, differences will persist.