A Stimulus Deal is Near While the Federal Reserve Keeps Rates Close to Zero
- Author: Jeffrey Simmons
- Posted: 2024-08-09
Senate Majority Leader Mitch McConnell wants COVID-19 liability protections for small businesses. The Democrats and House Speaker Nancy Pelosi wanted aid for state and local governments to keep police officers, firefighters, and teachers employed. Congressional leaders will negotiate these other items for a speedy package.
The stimulus package will supposedly be included in the omnibus spending bill, which would keep funding the American government until September 2021.
A vote is expected by the end of the week. Presently, Congressional leaders consider giving taxpayers and their dependents stimulus checks in the range of $600 to $700. Vermont Democratic Senator Bernie Sanders would like hardworking American families to receive $1,200 per adult.
To keep the package within budget constraints of a trillion dollars, representatives may reduce the aid for the unemployed by several weeks. President-elect Joseph Biden said Americans should consider this a down payment on what is to come next year. Lawmakers must approve bills by midnight on Friday to keep the government afloat.
Because of the new tenure, Congress decided to only fund relief for the next few months. The economy may improve as the Pfizer and Moderna vaccines are distributed throughout the nation. The Gates foundation donated billions for the research of the vaccine.
What Else is Included in the Package?
Democratic Representative Josh Gottheimer from New Jersey said that this is a wonderful win for the people of America. Cases had been spiking for the winter, and many businesses had to close their doors. Families are hurting, and no one can be left out in the cold alone. The package will possible include:
- Small businesses EIDL and PPP Loans: $288 billion
- Transportation: $45 billion
- Unemployment benefits: $180 billion
- Healthcare relief fund: $35 billion
- Vaccine distribution and contact tracing: $16 billion
- Opioid and mental health treatment: $5 billion
- Early childhood education: $10 billion
- Broadband: $10 billion
- U.S. Postal Service: $10 billion
- Rental assistance: $25 billion
- Agriculture and nutrition: $26 billion
- CDFI/MDI Lender support: $12 billion
- Student loans: $4 billion
The Federal Reserve
Fed Chair Jerome Powell and the Federal Reserve remain committed to the American people by providing financial assistance for those hardest hit by the coronavirus. Because the American recovery is underway, the interest rate to borrow money will remain low — giving hope to millions of people.
While holding interest rates close to zero, Jerome Powell will maintain credit flow by increasing bond holdings until the economy is back to near employment.
The treasury department has limited some of the functions of the Federal Reserve. They can no longer buy into struggling American corporations after the end of the year. Steve Mnuchin decided to end the program and divert those funds for the American relief package.
The Federal Reserve must also stop buying mortgage-backed securities, which was equivalent to the quantitative easing initiated during the 2008-2009 financial crisis. The think-tanks at the Fed did not have any guidance or paraments when the program was approved. Howbeit, the markets felt the immediate impact when the Federal Reserve implemented the program.
Once the Biden administration is in full swing, Treasury Secretary-elect Janet Yellen may seek to reinstate some programs. Greg McBride hopes that at that time, there would be more cooperation among members of Congress. Vaccines increase the likelihood that the American economy would act like a rubber band and snap back to normal. But, according to McBride, we must get there first.
Preferred Interest Rates
Even if we did not get another relief package, the rock-bottom interest rates would contribute to a speedier recovery despite millions of Americans being out of work.
Although the American people cannot borrow money from the Federal Reserve at the same interest rate as the banks, they still have preferable savings and loan interest rates.
For example, credit cards have lowered their average interest rate from 17.03% to 16.08%. Personal loans are averaging 11.92%, and you could obtain a home equity line of credit at 4.7%.
