IMF's warning of currency depreciation due to rate cuts August 22 at 7:17
The IMF = International Monetary Fund announced on the 21st that it pointed out that the effect of trade improvement is limited even if it induces currency depreciation through monetary easing such as interest rate cuts.
With regard to global monetary policy, the FRB, the central bank of the United States, has converted to a rate cut for the first time in 10 and a half years. Cheap competition is starting to happen.
Under these circumstances, the IMF released a report that alerts this situation on the 21st, but monetary easing such as interest rate cuts stimulates domestic demand, but there is also a concern that currency depreciation will raise the price of imported goods and reduce demand on the contrary Pointed out.
For this reason, even if a country with a trade deficit induces a currency depreciation that cuts 10% of the currency, it is estimated that the improvement will be only about 0.3% of GDP = GDP, and the effect is limited.
On the contrary, the induction of currency depreciation encourages retaliation such as raising tariffs like trade friction between the United States and China, and it ultimately restrains currency depreciation as it worsens the economy of all countries.
The IMF recommends that each country should prioritize reforms such as deregulation of the country and improvement of the skills of workers in order to strengthen export competitiveness.