We have seen an unprecedented response to manage the current health crisis. This has led to significant economic damage, as countries implement social distancing to manage the health of their populations. To provide economic support, quantitative easing has been implemented on an industrial scale, with central banks rapidly expanding the range of financial assets they are willing to buy. Also, governments have stepped up to the plate, aggressively implementing fiscal packages that will see budget deficits similar only to periods of war. As at the time of writing, policy makers around the world have provided a total of US$7tr of QE, US$6tr of fiscal policy, and US$4tr in loan loss guarantees.

Has QE become less effective?

What about Pandemic economics?

Will debt levels be sustainable?

Is the extraordinary policy response likely to cause inflation?

In this note, Simon Stevenson, Deputy Head of the Schroders Multi Asset team, examines the strengths and weaknesses of the various policy responses, the economic impact of pandemics, and the likely medium-term consequences of the policy actions.

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While every care has been taken in the preparation of this information, Research IP makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This blog post has been prepared for the purpose of providing general information, it is not personal financial advice and should not be relied upon as a substitute for detailed advice from your authorised financial adviser. You should, before making any investment decisions, consider the appropriateness of the information in this email, and seek professional advice, having regard to your objectives, financial situation and needs.

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