Stimulus Payments 2022: Stimulus checks from the Federal Reserve until March – Marca English

The US government and the Federal Reserve have come together to launch a stimulus program amidst the COVID-19 pandemic, with the aim being to boost the economy and keep money flowing from businesses to workers and back to businesses. However, there is a time limit on this program as it is set to wind down in the spring of 2022.

The stimulus checks given out by the US government had already stopped, even is some states are continuing to give out stimulus checks to their residents. Now, the Federal Reserve will follow suit as their bond-buying stimulus spree is to be eased earlier than initially planned.

How is the Federal Reserve currently contributing to the USA’s stimulus programs?

By purchasing bonds for billions of dollars per month, the Federal Reserve is able to have an impact on the USA’s economy. However, this brings with it inflation and this is the problem.

In November, Federal Reserve directors already decided to reducing their bond-buying from 120bn dollars per month to 105bn dollars and then 90bn dollars. Now, they’ll start cutting back by 30bn dollars per month, meaning they’ll purchase ‘just’ 60bn dollars worth of treasury and mortgage securities in January.

This means that the Federal Reserve’s stimulus program is set to completely wind down by March of 2020.

Why is the Federal Reserve winding down stimulus by March?

Rising inflation is the main reason for this change in policy. Although the Federal Reserve usually likes to make changes slowly, they are decelerating stimulus quickly because of fears inflation could get stuck at a high rate.

“The Fed apparently just woke up to the inflationary pressures consuming the US economy,” Seema Shah, chief strategist at Principal Global Investors, said in a piece for the BBC. “With Consumer Price Inflation in touching distance of 7 percent, it should be of no surprise to see the Fed accelerating tapering.

“If they could wave a wand, I think they would want to stop it altogether, because it’s not needed in the economy at this point,” added Kenneth Rosen, housing economist at the University of California, when talking to the Wall Street Journal. “There’s so much money flowing through every single asset class.”

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