The Day at a Glance | February 14 2022

The Top

*Esther George (Kansas City FED) discarded an interest rate increase during the central bank`s emergency meetings.

*New conversation between Biden and Putin fail to halt tensions in Ukraine; U.S. warns of possible invasion this week.

*Russian Foreign Minister Sergei Lavrov backs the idea of maintaining diplomatic efforts with the West in order to avoid conflict in Ukraine.

*G-20 Finance Ministers will have a meeting at the end of this week to discuss inflation, financial conditions and the pandemic.

Economic environment

The FED will not make any sudden decisions. Members of the Federal Reserve have continued making comments about the need to carry out monetary normalization. The most recent comment was made by Esther George (Kansas City FED), who, in an interview with the Financial Times, discarded any unscheduled interest rate increase. Additionally, she said that she is not convinced about a 50bp increase in March and would rather consider the early sale of debt securities in the central bank`s balance. George ultimately backed relying on data – every monetary policy decision will be made on the economy`s developments. In this sense, Mary Daly (San Francisco FED) once again assured that any abrupt or aggressive decisions could have negative effects and destabilize growth and price stability objectives that the central bank seeks to reach. Daly also highlighted the need for every decision to depend on data. At the moment, markets are taking into account a 50bp increase in March with a 73.4% degree of probability and have even started to speculate about a rise in the central bank`s emergency meetings. The FED will have a closed door meeting this Monday to define down payment and deposit rates applied in the Federal Reserve`s banks. During the weekend, there was speculation that the FED would also increase the federal funds rate, something that was discarded by the central bank`s members and clarified that the gathering would be a routine meeting and that they would not make any changes concerning interest rates in unscheduled meetings.