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The look ahead: US interest rates; European economic sentiment; revenue recognition


The direction of the US economy—and how that might impact interest rates—will dominate discussion when the US Federal Open Market Committee meets on Tuesday and Wednesday. The committee, which makes key decisions about the nation’s money supply, is expected to hold steady on its policy to keep the federal funds rate low.

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.

“Strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook,” the Federal Reserve said last month.

The upcoming meetings are important because the Fed has been trying to provide more transparency in an effort to show how its economic outlook is tied to policy, Bloomberg reports.

In addition to the Fed’s commentary, Americans will also get key economic data points. Reports on new home sales and consumer confidence are due out on Tuesday. And on April 27th, the US releases the latest GDP figures

European economy

Europe will also get a dose of data in the coming week. Reports on business and consumer sentiment will help economists and investors assess whether economic activity in the region is stabilising or whether euro-zone deficit and debt crises are pushing the region into recession.

The Economic Sentiment Indicator, which the European Commission releases April 26th, is the most comprehensive measure. The ESI, which tracks confidence levels in the manufacturing, retail and service sectors as well as among consumers, declined slightly in March after improving in January and February.

Country-specific measurements for France and Italy come out Monday.

France’s National Institute of Statistics and Economic Studies releases survey results of business leaders in the main economic sectors. This indicator, like the ESI, has hovered below the long-running average for months. In March, the French business climate improved slightly.

The Italian National Institute of Statistics releases consumer confidence data the same day. The index, which includes perceptions on inflation and unemployment, increased slightly in March.

Revenue recognition

The US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) will hold joint roundtable discussions on their proposed, converged standard on revenue recognition from 9 a.m. to noon and 1 to 4 p.m. EDT April 26th  at FASB’s offices in Norwalk, Conn.

Titled Revenue Recognition (Topic 605): Revenue from Contracts with Customers by FASB and Revenue from Contracts with Customers by the IASB, the proposed, revised Accounting Standards Update will be discussed with a wide variety of stakeholders.

The core principle of the proposed standard would require entities to recognise revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for those goods or services.

The meeting will be available by audio webcast at FASB’s website.

Financial reporting panel

Three distinguished panellists will participate Tuesday in a wide-ranging discussion of strategic matters relating to financial reporting in the past, present and future.

Sir David Tweedie, the former IASB Chairman who is taking over as president of the Institute of Chartered Accountants of Scotland (ICAS) this month, will join IFRS Advisory Council Chairman Paul Cherry and former FASB Chairman Bob Herz  during a session called “Shaping the Future: Lessons from Accounting Standards Leaders.”

The discussion is likely to include topics such as principles-based versus rules-based accounting standards; the impact of the recent financial crisis; and the complexity of financial statements.

The AICPA, ICAS and the Canadian Institute of Chartered Accountants (CICA) are presenting the event. It will be moderated by AICPA Chairman Greg Anton and ICAS Chief Executive Anton Colella.

Coverage of the invitation-only event can be found Tuesday at CGMA Magazine.

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