The Day at a Glance | June 22 2021

The Top

*Members of the FED focused on inflation; they differ about decreasing the asset purchasing program.

*G20 will approve a minimum corporate tax at a worldwide level in its July meeting and will seek to implement it starting in October: Reuters.

*Chair of the FED Jerome Powell will testify before Congress about the economic recovery this afternoon.

*Greater inflation in the US would only have a limited impact on prices in the Eurozone: Lagarde.

*Negotiations in the nuclear pact with Iran could extend beyond August.

Economic environment

Members of the Federal Reserve focus their attention on inflation for future monetary policy decisions. In public speeches made yesterday, some members of the United States Federal Reserve assured that it shall focus more on inflationary risks in order to define future monetary policy. St. Louis FED President James Bullard said that nobody really knows how inflationary pressures will evolve, which is why they should be prepared for a scenario in which inflation accelerates and risks increase; this would imply faster monetary normalization. This occurred despite the fact that most still consider that inflationary pressures are merely temporary. Dallas FED President Robert Kaplan favored the idea of the bank starting to reduce its purchasing asset program sooner rather than later, once the pandemic has started to pass and recovery has strengthened. However, not everybody shares the same opinion. John Williams of the New York FED, reiterated that inflation will return to 2% next year, specifically because the labor market has still not fully recovered, which is why his stance on the matter is more flexible regarding the need to withdraw stimuli. Chair of the FED Jerome Powell will testify before Congress today (1:00 pm Mexico City time), during which legislators and markets will seek to find clarity about the FED`s strategy to face inflationary pressures without stopping the recovery process from the pandemic.