More relief funding is something many are seeking amid the coronavirus pandemic, among the many are Federal Reserve officials. The need has to do with a pair of reasons — one being the limit of their abilities, and the other being the nature of the impact.
The upcoming meeting will have officials fighting to get some more substance on their inflation plans. The new program would follow up with higher periods of inflation with below-target inflation. In doing this, officials are hoping to use forward guidance to express their plans for how long rates would remain low, which previously helped lower long-term rates in 2008 and aided in future investments. A story written in the Wall Street Journal noted that a survey of economists saw more than half of them believing rates would not be raised by 2024.
That same article explained how increased government spending would fare better in the economy recover than a stimulus. This has to do with the chain in the economy that is impacted, where one entity gets affected because of closures or lack of opportunity amid the pandemic and the trickle-down effect it has on the entire chain. With different markets, such as the difference in how technology companies have fared this year compared to the travel industry, a stimulus could prove to overstimulate a certain sector. With such a complex issue at hand, there doesn’t appear to be any clear answer as to what federal reserve officials will wind up doing.
On a separate subject, stimulus talks remain at a standstill with discussions reactivated. Republican senators called the bill dead after a rejection by Democrats and there doesn’t appear to be much optimism of one being agreed upon anytime soon. Senate Majority Leader Mitch McConnell went on to say the odds of a plan passing before the November election remain fairly dim. President Donald Trump's economic adviser has even begun to place some pressure on Democrats to come to a compromise in terms of a relief plan.
This comes after Nancy Pelosi suggested Democrats would not bend that much when it comes to the Republicans' proposal. With the two sides showing no signs of budging, it does appear a plan will end up not being agreed upon until much later in the year if at all. Pelosi summed it up in a private press conference, saying, "We don't want to go home without a bill, but don't be a cheap date. When you are in a negotiation, the last place to get weak knees is at the end."