U.S. Has ‘Very Large’ Stimulus Capacity, IMF Fiscal Chief Says

(Bloomberg) -- The U.S. has ample room for additional federal stimulus and “a very large capacity to act,” according to Vitor Gaspar, the International Monetary Fund’s fiscal affairs department director.

It’s important for the recovery in the world’s largest economy that support continues for vulnerable households and viable businesses that otherwise would be under stress, Gaspar said in a briefing before the fund published its updated Fiscal Monitor report Thursday.

President Joe Biden’s $1.9 trillion stimulus proposal and plans for additional spending “would have considerable impacts” on economic growth through 2023 and also likely aid the Federal Reserve’s aim to increase inflation temporarily above the central bank’s 2% target, he said.

“This Biden relief plan is a first stage of a broader strategy that includes medium- to long-term growth priorities, and public investment in infrastructure that will come later,” Gaspar said. “We do believe that this sequencing is exactly appropriate.”

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