The Day at a Glance | March 25 2021

The Top

*Changes in monetary policy will be gradual and transparent: Powell.

*Biden will give his first press conference at the White House today; he will talk about vaccines and the migration issue at the southern border of the US.

*Banxico will make a monetary policy decision today (1:00 pm Mexico City time).

*Jobless claims in the United States drop to their lowest level since the start of the pandemic (684 thousand).

*Retail sales in Mexico exceeded estimates during January (0.1% monthly; -7.6% annual).

*PMIs in the United States confirm a persistent acceleration in the economy`s recovery through March; manufacturing leads the way.

Economic environment

Chair of the Federal Reserve Jerome Powell and Secretary of the Treasury Janet Yellen gave testimonies before Congress regarding the United States economy. Among their most relevant comments, both once again said that fiscal and monetary stimuli will continue to be necessary to back the economic recovery. Even though extraordinary economic growth is expected during 2021, Yellen and Powell reiterated that 9.5 million jobs were lost because of the pandemic and need to be recovered. Yellen assured that the recently approved fiscal package in Washington is necessary, reaffirmed that her stance is lenient towards increasing debt now (in a low interest rate environment) and that future spending plans must come along with a rise in taxes, referencing President Biden`s 3 trillion dollar economic plan. On his part, Powell once again dismissed inflationary pressures that could come up from the aggressive fiscal and monetary stimuli; he considered that the rise in interest rates is a sign of confidence in the recovery after the pandemic and reiterated that there will be an accommodative monetary policy until 2023. In statements made today, Powell assured that any changes in monetary policy will occur after a complete recovery in the economy. In other words – until the pandemic`s impacts have disappeared. Once this happens, monetary policy will normalize in a gradual and transparent manner with the withdrawal of emergency aid implemented by the central bank.