Fed: Infinity War or Endgame?

Summary

In response to the COVID-19 pandemic, the Fed has announced sweeping conventional and unconventional actions. Based on the uptake in the Fed offerings to date and our expectations for the path economic activity, the Fed’s balance sheet is poised to rapidly increase to around $8Tn, before stabilizing around that level.

Key points

• Key points:
• Only time will tell if these actions were sufficient and effective enough
• The boost to the balance sheet will help stabilize financial markets and support lending conditions
• The level of effectiveness will depend on the duration of the restrictions and the confidence of consumers and firms to spend and invest robustly

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