Interest Rate Announcement – Forex Calendar

Interest Rate Announcement – Forex Calendar

Posted on

Interest Rate Announcement – Forex Calendar

The interest-rate announcement specifies the short-term target rate that the central bank will try to maintain in the future. Interest rates are one of the most important economic announcements on the calendar because the interest rate that a central bank sets for its economy has ripple effects that spread far and wide. You will also notice that many of the other economic announcements that we discuss gain some of their importance from the impact they have on a central bank’s decision-making process when it sets interest rates.

Interest-rate data are released in one key announcement that you need to watch:

Central bank interest-rate announcements: Official announcements from a central bank stating what the target short-term interest rate for the economy is going to be.

Impact on Trade Flows

Rising Interest Rates —> Increased Investment Flows Increased Demand for Currency Increase in Value of Currency —> Less Competitive Exports Decrease in Trade Flows

Falling Interest Rates -> Decreased Investment Flows —> Decreased Demand for Currency —> Decrease in Value of Currency –> More Competitive Exports —> Increase in Trade Flows

Impact on Investment Flows

Rising Interest Rates -> More Attractive Investment Returns->Increased Investment Flows

Falling Interest Rates —> Less Attractive Investment Returns —> Decreased Investment Flows

Impact on Money Supply

Rising Interest Rates —> Decrease in the Money Supply

Falling Interest Rates —> Increase in the Money Supply

Impact on Investor Fear

Raising Interest Rates (When Inflation Is Rising) -> Confident Investors

Not Raising Interest Rates (When Inflation Is Rising) —> Nervous Investors

Lowering Interest Rates (When the Economy Is Slowing) ->Confident Investors

Not Lowering Interest Rates (When the Economy Is Slowing) —> Nervous Investors

Typical Impact on the Currency

Rising Interest Rates -> Stronger Currency

Falling Interest Rates -> Weaker Currency

Add a comment

Leave a Reply

0 comments