The look ahead: US, G20 could focus on euro-zone recovery

The US Federal Open Market Committee, which meets June 20th, is again expected to hold steady on its policy to keep the federal funds rate low. But economists and investors will be keeping a close watch for a change in tenor from Federal Reserve Chairman Ben Bernanke.

Bernanke told lawmakers this month that the Fed was prepared to take action if the European debt crisis poses a stronger risk to the US economic recovery.

In 2008, the committee cut the benchmark rate target to between 0% and 0.25% in an effort to spur economic activity during the recession. Despite moderate improvement in the US economy, the committee expects to keep the rate low until late 2014. The Fed could decide to extend that policy, but most economists don’t expect such a move to come this month, The Associated Press reported.

Economists and investors will be looking to the June 20th meeting for clues as to what the central bank may do next, and for more details about how the Fed thinks the euro-zone crisis is impacting the US economy.

The European crisis, and how the US stimulates its economy, could also be a focal point of a two-day G20 summit, which starts Monday in Mexico. US President Barack Obama has been pushing European leaders to work to resolve the crisis, citing stimulus programmes that the US government used in 2009.

UK labour data

UK labour market statistics, to be released by the Office for National Statistics on Wednesday, could suggest how likely the British economy is to remain in a recession.

Figures for April suggested the economy was doing better than generally expected at the start of the second quarter. Claimant count unemployment declined for the second month in a row, and the April drop was the steepest since July 2010. The unemployment rate edged down to 8.2% in April.

The April labour market statistics suggested that real GDP was expanding modestly and that inflationary impulses from wages were minimal.

IFRS updates in US and Japan

The agenda for the IFRS Advisory Council’s meeting Monday and Tuesday in London includes an update on the situation regarding IFRS adoption in the United States and Japan.

US Securities and Exchange Commission (SEC) Deputy Chief Accountant Julie Erhardt is scheduled to give the update on the U.S. position on IFRS adoption. The SEC staff is thought to be nearing completion of its final report to the commission on IFRS.
Makoto Sonoda, deputy director of the Corporate Accounting and Disclosure Division of the Japanese Financial Services Agency, will give the update on Japan. A year ago, the Japanese government announced a delay in its transition to IFRS as businesses devoted their attention to recovering from the economic fallout from the devastating tsunami that took place in March 2011.

The update to the IFRS Advisory Council is scheduled for Monday. An audio recording will be made available on the IFRS website.

GASB works on pensions

The US Governmental Accounting Standards Board (GASB) will consider approving ballot drafts of two final statements on pensions when it meets Monday in Seattle.

Accounting and Financial Reporting for Pensions and Financial Reporting for Pension Plans will be reviewed.

If time permits, GASB also will consider for approval a ballot draft of a proposed statement, Accounting and Financial Reporting for Nonexchange Financial Guarantee Transactions.

The meeting will be held from 11:30 a.m. to 3 p.m. EDT and is available by teleconference.

—From CGMA Magazine staff reports.