The Day at a Glance | March 16 2022

The Top

*The Federal Reserve will have a meeting today (12:00 pm Mexico City time); it`s expected to start increasing interest rates for the first time since 2018.

*Kremlin says there is progress in negotiations with Kyiv; neutral Ukraine with army could be compromise.

*February`s retail sales in the United States increased at a more moderate pace (0.3% monthly); excluding gasolines, sales receded (-) 0.2%.

*Chinese authorities commit to moderating regulations, backing the real-estate sector, tech companies and stimulating the economy.

Economic environment

FED decision. At noon, the United States Federal Reserve will make a monetary policy decision in which it`s expected to increase rates for the first time since 2018. Chair of the FED Jerome Powell assured Congress a few weeks ago that he backs a 25 base point increase. With this scenario being the most likely to occur, markets will focus on the central bank`s macroeconomic forecasts in order to know how fast the cycle of rising interest rates will be carried out – as well as how aggressively the bank will fight inflation. It`s very likely that the press release and the press conference will focus on sending a message that the FED`s priority is to control inflation and remain open to the possibility of carrying out more aggressive actions in the future. There is still a high degree of uncertainty regarding how fast interest rates will be increased: Analysts expect the FED`s members to forecast 4 increases in 2022; but markets are currently considering 7 increases, one for every meeting this year. The FED`s new forecasts will help adjust future monetary policy expectations. In any case, the Federal Reserve is expected to maintain a data-based stance and will not commit to a fixed plan concerning interest rate hikes. Lastly, more details are expected to be cleared up regarding the withdrawal of liquidity in debt markets. A few weeks ago, Powell assured before Congress that the quantities that will stop being reinvested in mortgage-backed Treasury bonds were to be discussed in today`s meeting in order to reduce the bank`s balance of assets.