IMF warns against rate cuts, currency intervention to improve trade balance

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  1. The International Monetary Fund(IMF) has warned the United States and China that higher bilateral tariffs are unlikely to reduce aggregate trade imbalances as they mainly divert trade to other countries.
  2. Instead,they are likely to harm both domestic and global growth by affecting business confidence and investment and disrupting global supply chains.
  3. The IMF has also cautioned countries against focusing on weakening a country’s currency exchange rate.It said that this would hurt the functioning of the international monetary system and will affect all countries.
  4. The International Monetary Fund (IMF) is an international organization headquartered in Washington,US.It consists of 189 countries.It was formed in 1944 at the Bretton Woods Conference.
  5. IMF has been established to (a)foster global monetary cooperation (b)secure financial stability, (c)facilitate international trade (d)promote high employment (e) sustainable economic growth and (f)reduce poverty around the world.