There are many world leaders who rail against the US central bank's $600bn (£375bn) bond buying spree, which they believe has artificially inflated financial markets and blighted their recovering economies with persistently high inflation.

Without quantitative easing, they argue, their populations could still afford to buy staple foods without busting their already stretched budgets. Local stock markets, flooded with excess US cash, would also stop reaching bubble proportions and threatening to burst, an outcome with horrific consequences for investor confidence.

Tomorrow will bring the Federal Reserve's second round of quantitative easing – "QE2" – to a conclusion, and many of those leaders, from India to China and Brazil to South Korea, will breathe a sigh of relief.

For the moment, Fed chairman Ben Bernanke is willing to pause. Not only is he facing a barrage of criticism from foreign policymakers, but QE has become a central issue for the right-wing Tea Party political movement in the US. Day after day, Republicans parade through the TV studios of CNN and Fox News to denounce Bernanke and his asset purchasing scheme for importing inflation back into the US, especially through higher oil prices, and his refusal to back austerity measures. After $1.8tn of asset purchases dating from QE1 in addition to $600bn from QE2, Republicans say the state has played its final hand.

Yet to many economists, the benefits of QE are clear. At times when the banks are near-bust and unable to lend, the central bank must step in.

Several countries hit by the credit crunch have chosen to employ it, though when the Japanese did so, they were widely considered to have missed the mark. Their central bank attempted to inject funds through local banks, but the cash was largely absorbed. With little demand from cash-rich corporations for lending and consumer confidence low, the central bank's funds went nowhere.

Deluged

US and British central bankers bypassed the banks and bought government bonds held by institutional investors and pension funds, exchanging them for cash. The rise in demand for bonds sent yields crashing through the floor, which encouraged investors to look at alternatives. Their first port of call was the stock market: data shows the US stock market rising last summer in line with the Fed's bond-buying, pausing when the Fed paused, and racing away when the buying began again.

Commodity markets, corporate bond markets and emerging stock markets have also found themselves deluged with investor cash looking for a high return.

The chase for yield – the need to hold assets with a low value relative to the return – is nothing new. However, the billions of pounds spent by central banks on their own government's bonds released a tidal wave of cash that needed to find a home. Booming commodity markets were an unwanted side-effect of boosting investor confidence in stock and bond markets, which had threatened to spiral downwards when the recession hit.

Adam Posen, an external member of the Bank of England's monetary policy committee, repeated his warning earlier in the week that Britain needed another dose of QE to keep asset prices from sliding and stop confidence in the economy ebbing away. In the face of government austerity cuts, which will strip more than £12bn out of the economy this year in rising VAT bills alone, he said an extra £50bn in QE was the bare minimum needed.

In the US there are also members of the federal open market committee, the Fed's equivalent roster of economic experts, who support further QE. Unemployment is rising, growth has slowed dramatically and the closely watched Case-Shiller index of property values in 20 cities fell 4% year on year in April, the biggest drop since November 2009. Robert Shiller, the founder of the index, said this month that US house prices could fall 25%, adding to the 33% dive in values since 2009. The Dow Jones average of US shares has also fallen since the beginning of May, when Bernanke ruled out QE3.

Analyst Paresh Upadhyaya of Bank of America Merrill Lynch said it was noticeable that while the markets had noticed the change in direction, the reaction was subdued.

"This was notable since it shifted the US monetary policy stance from easing to on-hold – an important change that went under-appreciated in our view as markets were distracted by global growth and the incessant peripheral European woes."

Nick Parsons, head of market strategy at NAB Capital, said he remained sanguine that asset purchases were about to end. He argued the Fed would hang on to its existing portfolio, which was enough to maintain market confidence and support the US economy as it recovers.

However, QE3 remains a distinct possibility. Andy Howse, an investment director at Fidelity, said that with the US about to follow Britain down the road to austerity, with potentially steep cuts in welfare spending, the Fed could be forced to open its wallet again.

Unwind

"As we come to the end of QE2, it is unlikely that the Federal Reserve will waver from its commitment to foster economic growth and employment. Given the present vulnerability of US economic growth, it seems fairly unlikely that it will drastically unwind the treasuries bought during this latest asset purchase programme," he said.

While it was possible that unemployment could still fall as a result of QE2 and wages starting to rise in reaction to higher than expected inflation, it was an unlikely scenario, he argued. "There are also worries over weak economic growth, particularly in the context of the public debt position. In contrast to the UK, the US has only just started to consider the spending cuts that most observers believe are necessary in the long term. Congress recently approved a paltry $38.5bn spending cut, which pales in comparison with the US government's ballooning budget deficit that is expected to hit $1.5tn this year. A growing chorus of support for larger cuts means this is a real possibility next year."

More QE could mean higher commodity prices and higher inflation in economies that become the target of US investors – but, for Bernanke, it is a small price to pay for keeping the US economy from a full-blown depression.