The U.S. investors are eagerly awaiting Wednesday’s Fed decision in the face of the worsening health situation. Until the economic recovery meets those requirements, the U.S. central bank could announce an extension of its asset buying programs (“QE”). Even if this is not the most possible assumption, it is also not out of the question for the bank to lift the amount of its programs. The Fed would also need to take into account the federal government’s budgetary support, the next phase of which is slow to materialize.
Markets are the observing the introduction of a new budget package, as most of the assistance initiatives, including the payment of unemployment insurance to 12 million Americans and the freeze on loans and rentals to individuals and companies, will be withdrawn at the end of the spring on 31 December.
A new bipartisan bill in the Senate, worth $908 billion, has appeared in recent weeks. The proposal was outlined on Monday by U.S. lawmakers, supported by a coalition of Democratic and Republican senators, as well as Nancy Pelosi, the Democratic speaker of the House of Representatives.
According to media sources, in the hope of convincing the two houses, the stimulus plan was divided into two distinct budget packages. The Wall Street Journal refers to a separation between a “package” of $160 billion (money to states and cities, immunity from Covid-related lawsuits) and a more consensus proposal of $748 billion to pay $300 per week in unemployed compensation for four months from January onwards, as well as a package of $300 billion in aid to SMEs and $35 billion in vaccine delivery funding to the health sector.
So far, Republican Senate President Mitch McConnell (whose support is crucial to get the bill passed) has remained hesitant and has set requirements, including insisting that the proposal protect businesses from Covid-19-related litigation. McConnell also refuses states and local authorities direct assistance.