Powell Testimony, Measuring Inflation, Higher Tax Rates: Eco Day

Welcome to Wednesday, Americas. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:

  • Inflation is harder to measure after a year of pandemic spending
  • Democrats will likely prove successful in raising individual income tax rates and in strengthening audits of wealthy Americans as they work on overhauling the U.S. tax code in coming months
  • Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen are set to appear before Congress for a second day of hearings. On Tuesday, Powell said prices would rise this year as the pandemic recedes and Americans are able to go out and spend, but he played down the risk that this would spur unwanted inflation
  • The Bank of Canada is signaling it will the first Group of Seven central bank to clearly start taking its foot off the gas as the nation’s economic recovery from the Covid-19 crisis accelerates
  • The combination of rising global yields and the $1.9 trillion U.S. stimulus has divided market views. As emerging-market currencies depreciate, some fear a repeat of the 2013 taper tantrum. With expectations that U.S. growth for the year will touch 7.7%, others see positive spillovers buoying global growth. In fact, neither view quite hits the mark. Bloomberg Economics’ Björn van Roye and Tom Orlik explain why
  • European Union vaccine shipments to the rest of the world could face severe disruptions under tougher rules
  • German manufacturing increased at a record pace in March, leading an economic revival in Europe that saw French activity stabilize. U.S. PMIs are due later today
  • China’s local governments had 14.8 trillion yuan ($2.3 trillion) of hidden debt last year, and the figure could climb even further this year, according to a government-linked think tank
  • The IMF is considering creating up to $650 billion in additional reserve assets to help developing economies cope with the pandemic

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