$70 billion tax package could put pressure on Fed

In the US, congressional negotiators are set to discuss an extension of the tax cuts worth approximately $70 billion this week. In the US, congressional negotiators are set to discuss an extension of the tax cuts, which could trigger approximately $70 billion in spending, this week. According to economists, if the package is passed by the US Congress, it could affect the timing of the Fed’s interest rate cuts this year. According to Hoover Institution Fellow Mickey Levy, an extension of the tax cuts could further overheat the US economy, which is already outperforming its long-term potential growth. Levy commented, “In the current situation, a significant fiscal stimulus would support economic activity.” According to Marc Goldwein, senior analyst at the Committee for a Responsible Federal Budget, an organization that advocates reducing the budget deficit, if the bill is passed, its positive impact on household incomes would be seen in March at the earliest. Goldwein is skeptical that the bill will increase investment. According to analysts, we will have to wait for the final version of the bill to see its impact on inflation. The draft version is expected to extend the tax cuts until 2025. Consumer prices in the US saw their biggest annual increase in three months in December. While services inflation played a major role in this increase, the continued rise in automobile and clothing prices was interpreted as an indication that the economy was still heating up.