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Showing posts with the label Guiding Economic Course: Central Bank's Control of Credit and Market Operations

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

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📉 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...
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Guiding Economic Course: Central Bank's Control of Credit and Market Operations

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Central banks serve as the captains of the economic ship, steering the economy towards stability and growth through the strategic management of credit and market operations. In this post, we'll explore how central banks exert influence over the economy by controlling credit and conducting market operations. Control of Credit: Navigating the Lending Landscape Central banks wield significant influence over the availability and cost of credit in the economy. By manipulating key interest rates and implementing credit control measures, they shape borrowing and lending behavior, influencing investment decisions and overall economic activity. Interest Rate Policy: One of the primary tools central banks use to control credit is the manipulation of interest rates. By adjusting the central bank's target interest rate, such as the federal funds rate in the U.S. or the repo rate in India, they influence the cost of borrowing for banks and financial institutions. Lowering interest rates en...
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