Biden stimulation adds “more fuel to the fire” of expected inflation
Joe Biden’s $1.9tn coronavirus relief package is expected to pass Wednesday after receiving final support from the U.S. House of Representatives.
The bill passed the House with a narrow margin of 220-211 votes, with only all Republicans and one Democrat opposed the proposal. Biden will be able to sign the bill into law on Friday.
After a few weeks of process, passing the bill is a major step for a president whose mission is to see the United States a richer future from the pandemic.
In a statement from the White House moment after the vote, Biden said: ”.
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The package includes direct payments of up to $1,400 to a significant number of American adults, unemployment benefits, $350 billion worth of assistance to local and state governments, and an expanded child tax credit. Masu.
“Currently, the market celebrates additional stimuli and sees it as a stronger bridge to a fully reopened economy,” said Jeff Buchbinder, equity strategist at LPL Financial.
However, Joshua Mahony, senior market analyst at IG, turned his attention to possible flaws in the president’s inspiration.
“Traders are looking for this package as a way to turbocharge the US economic recovery, but there are many questions about its impact on inflation,” Mahony said.
“Inflation expectations are already rising in the US, and once this huge stimulus package passes, more fuel will be added to the fire. Powell needs the Fed to tighten its policy in the event of price increases. We try to ease concerns that there is, but the key question is whether this package will accelerate broad expectations for a big bounce at the 2021 inflation level.
