Inflation May Rise If Government Sends More Stimulus Check
Millions of people across the US suffered from the COVID-19 pandemic. Federal Reserve programs provided financial assistance to those who suffered in the pandemic. This was for a large number of citizens, including small and large businesses received stimulus checks, which had a significant impact on their capital flows. The stimulus program is set to end in March 2022.
Currently, several states have extended relief programs for residents who have not recovered from the pandemic wrath. It has been reported that the Federal government has followed the states’ lead and is providing an extension to the stimulus programs.
The Inflation May rise Further if More Checks are Added
According to Chronicle News, the stimulus programs are likely to worsen the economy’s wounds because of the increase in inflation in recent months. By 2022, the government will have difficulty countering the rise in prices of daily products and services.
Principal Global Investors’ chief strategist, Seema Shah, said as much to MARCA. She said, “The Fed just woke up to the inflationary pressures consuming the US economy. With Consumer Price Inflation in touching distance of 7%, it should be of no surprise to see the Fed accelerating tapering.”
Speaking with Wall Street Journal, UC housing economist Kenneth Rosen said, “If they could wave a wand to stop it altogether because it’s not needed in the economy at this point. There’s so much money flowing through every single asset of the class.”
March 2022 will be the Last Day to Purchase Bonds
Every month, the Federal Reserve stashes bonds worth billions of dollars, allowing it to support a number of relief programs for the US government. The Federal Reserve is capable of shaping the economy of the country. The long-term and short-term effects of extensive bond purchases adversely affect the US economy. Bond purchases have been reduced to $30 billion per month by the directors. A total of $120 billion in bonds was purchased in November; the reduction will now end in March 2022.