The Day at a Glance | September 1 2021

The Top

*Inflation is at risk of exceeding the ECB`s expectations: Jens Weidmann, President of the Bundesbank.

*China prepares greater financing for small businesses as a measure to face economic deceleration.

*Job creation in the US private sector disappoints during August (ADP 374 thousand vs 613 thousand e.).

*OPEC+ decision is expected this morning; markets anticipate an increase in production according to what was planned (400 thousand daily barrels).

Economic environment

Inflationary warning in Europe. The President of the Central Bank of Germany, Jens Weidmann, assured on Wednesday that there is a real risk that the European block`s inflation could exceed the European Central Bank`s estimates as temporary factors that have caused it to increase have filtered into underlying inflation. According to the ECB, inflation could continue to accelerate in the following months, but will eventually fall to 2% at the beginning of 2022 since the rise in prices is temporary. However, for Weidmann, upwards risks prevail as the upturn in inflation could lead to expectations of higher inflation and an acceleration in wages, which could lead the rate of inflation to set above the central bank`s long term target. Weidmann also suggested starting preparations for the withdrawal of the bank`s emergency purchasing program, in a process that he recommended should be gradual. The ECB is expected to start discussions regarding the withdrawal of the purchasing program on September 9th, even though no concrete decisions are expected to be made in the short term, and various members have assured that the program will be maintained in order to guarantee favorable financial conditions during the recovery. Weidmann is one of the most conservative members when it comes to inflation, which accelerated beyond estimates in August.