COVID-19 update: US policy response

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US authorities have provided an unprecedented package of support measures in response to the pandemic. The government has enacted $2.7tn of front-loaded fiscal stimulus. This stimulus should deliver an 8.6ppt boost to GDP in 2020, with little spilling into 2021. The Federal Reserve (Fed) cut the Fed Funds Rate by 150bps and has bought $2.3tn of assets to expand the balance sheet by $2.6tn in just over two months. This should boost growth over the medium term, and we estimate a boost of around 0.3 percentage point in 2020, 1.5-2.5% in 2021 and 0.5-1.0% in 2022.

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