WASHINGTON - The International Monetary Fund on Monday said a heavy dose of stimulus would ease the U.S. recession this year and lift growth marginally in 2010.

It said the U.S. dollar was only modestly above the level implied by medium-term fundamentals and its value would depend on foreign appetite for U.S. assets.

The combination of financial strains and ongoing adjustments in the housing and labor markets is expected to restrain growth for some time, with a solid recovery projected to emerge only in mid-2010, the IMF said at the conclusion of annual discussions with the United States.

The Fund projected the U.S. economy would contract by 2.5 percent this year, with a modest expansion in 2010 of 0.75 percent. This compares with the IMF's April forecast for the United States, which projected the economy to shrink by 2.8 percent in 2009 and improve slightly to show no growth next year.

(Reporting by Lesley Wroughton; Editing by Andrea Ricci)

International Monetary Fund