Posts

Showing posts with the label Exchange Rate Mechanisms Demystified: Flexible vs. Fixed Rates

U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook

-
📉 U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook As 2025 unfolds, the U.S. economy is showing signs of strain amid a global slowdown and heightened trade barriers. Here's a detailed look at the latest forecasts and implications based on insights from the OECD, Federal Reserve, and key market indicators . 📊 1. U.S. Growth Forecast Downgraded by OECD The Organisation for Economic Co-operation and Development (OECD) has revised the U.S. GDP growth forecast for 2025 to 1.6% , down from 2.8% in 2024 . The forecast for 2026 remains muted at 1.5% , reflecting persistent uncertainty driven by: Elevated trade barriers Reduced consumer spending power Sluggish business investment 💸 2. Tariffs Fueling Inflation & Trade Costs The average U.S. tariff rate has climbed to 15.4% , the highest level since 1938 . These tariffs have raised import costs, which are now being passed on to consumers: Projected consumer price inflation is expected to rise to...
Post a Comment
Read more

Exchange Rate Mechanisms Demystified: Flexible vs. Fixed Rates

-
Exchange rate mechanisms play a pivotal role in determining the value of currencies and shaping international trade and financial flows. In this post, we'll explore the two primary exchange rate regimes—flexible and fixed rates—unraveling their mechanisms, advantages, and challenges. Flexible Exchange Rates: Riding the Waves of Supply and Demand Under a flexible exchange rate system, the value of a currency is determined by market forces of supply and demand in the foreign exchange market. Governments and central banks do not intervene directly to set or maintain exchange rates, allowing them to fluctuate freely based on changing economic conditions. Mechanism: Market Forces: Currency values are determined by the interactions of buyers and sellers in the foreign exchange market. Factors such as trade balances, interest rates, inflation rates, and investor sentiment influence exchange rate movements. Floating Exchange Rates: Currencies float against each other, with their values adj...
Post a Comment
Read more