The Day at a Glance | February 23 2021

The Top

· Powell will testify before the Senate; an expansionary monetary policy is expected to be confirmed.

· ECB monitors sovereign debt markets closely; the rise in rates of long term instruments could hinder recovery, assures Lagarde.

· Economic indicators: Consumer confidence figures in the US are expected to be published (90 e.).

Economic environment

This morning, Chair of the Federal Reserve Jerome Powell will present his monetary policy testimony before the US Senate. Just like it occurs every six months, Powell will give Congress a report; he will testify before the Senate today and before the House of Representatives tomorrow. The Chair of the FED is expected to reiterate the central bank`s commitment to maintain an expansive monetary policy that will back the economy after the pandemic. In recent statements, the FED has assured that it does not expect to decrease stimuli for a long period of time, at least until 2023. It`s possible that legislators will focus their attention on asking questions regarding a fiscal stimulus and the inflationary risks that this would imply. It`s highly likely that Powell will back the fiscal stimulus and will reiterate that inflationary risks are not to be considered. The FED assures that, even though inflation could increase this year, the rise will be temporary and not sustained; while it`s important to simultaneously boost employment. Lastly, the recent rise in rates for long term government debt instruments will also be a topic of discussion – along with its repercussions on a monetary policy that seeks to maintain favorable financial conditions in light of the economic recovery. In Europe, the issue is already something that pressures the region`s central bank, according to President of the ECB Christine Lagarde, who sent a message of a possible intervention in order to avoid an upwards adjustment in rates that would create less favorable financial conditions that would obstruct a recovery.