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What influences forex interest rate decisions?
Anggota Sejak Jul 09, 2020
20 pos
Jul 29, 2020 at 08:33
Anggota Sejak Jul 09, 2020
20 pos
A number of factors influence interest-rate decisions. It can generally depend on one central bank to another. Central banks usually have mandates. The mission can be to preserve price stability or to guarantee low unemployment.
For example, the U.S. Federal Reserve Bank has a dual mandate to maintain inflation and jobs. Recently, New Zealand’s Reserve Bank also began a dual mandate.
Therefore, depending on the central bank, variables may change.
Generally, a central bank begins determining the inflation rate it wants to target as well as the unemployment rate. Then it can continue affecting interest rates.
With low rates, the central bank encourages economic borrowing. This increases job creation and demand. As demand rises, you can see this demonstrated by increasing GDP, lower unemployment.
When GDP and unemployment rate are on target, that gradually raises inflation. Higher inflation arises as investors buy more commodities. Higher demand leads to higher prices.
To combat inflation, the central bank must raise interest rates. In addition, lower demand for commodities pushing down inflation. By doing so (higher interest rates and lower interest rates), the central bank can maintain or attain inflation and unemployment rates
For example, the U.S. Federal Reserve Bank has a dual mandate to maintain inflation and jobs. Recently, New Zealand’s Reserve Bank also began a dual mandate.
Therefore, depending on the central bank, variables may change.
Generally, a central bank begins determining the inflation rate it wants to target as well as the unemployment rate. Then it can continue affecting interest rates.
With low rates, the central bank encourages economic borrowing. This increases job creation and demand. As demand rises, you can see this demonstrated by increasing GDP, lower unemployment.
When GDP and unemployment rate are on target, that gradually raises inflation. Higher inflation arises as investors buy more commodities. Higher demand leads to higher prices.
To combat inflation, the central bank must raise interest rates. In addition, lower demand for commodities pushing down inflation. By doing so (higher interest rates and lower interest rates), the central bank can maintain or attain inflation and unemployment rates
Jul 30, 2020 at 16:04
Anggota Sejak Dec 15, 2019
20 pos
I like the way you explain it. You've really managed to unravel the answer to the question. In fact, there's so much information around us right now that it can be hard to find the right and the accurate one. That's why I love this forum so much. It's a place where people can explain in their own words the hardest things in a way that you can understand them)
Anggota Sejak Jul 23, 2020
869 pos
Anggota Sejak Jul 23, 2020
759 pos
Nov 23, 2021 at 04:35
Anggota Sejak Nov 02, 2021
73 pos
Different countries have different interest rates, which in turn affect the exchange rate between currencies over time. This is because interest rates affect the demand for currencies, which in turn affects their value. Easier access to loans means more people are likely to borrow money to spend, which should cause the value of a currency to rise.
Anggota Sejak Apr 09, 2019
538 pos
Anggota Sejak Mar 17, 2021
536 pos
Nov 26, 2021 at 18:52
Anggota Sejak Mar 17, 2021
536 pos
tts_markets posted:Very informative post. thank you for the post.
A number of factors influence interest-rate decisions. It can generally depend on one central bank to another. Central banks usually have mandates. The mission can be to preserve price stability or to guarantee low unemployment.
For example, the U.S. Federal Reserve Bank has a dual mandate to maintain inflation and jobs. Recently, New Zealand’s Reserve Bank also began a dual mandate.
Therefore, depending on the central bank, variables may change.
Generally, a central bank begins determining the inflation rate it wants to target as well as the unemployment rate. Then it can continue affecting interest rates.
With low rates, the central bank encourages economic borrowing. This increases job creation and demand. As demand rises, you can see this demonstrated by increasing GDP, lower unemployment.
When GDP and unemployment rate are on target, that gradually raises inflation. Higher inflation arises as investors buy more commodities. Higher demand leads to higher prices.
To combat inflation, the central bank must raise interest rates. In addition, lower demand for commodities pushing down inflation. By doing so (higher interest rates and lower interest rates), the central bank can maintain or attain inflation and unemployment rates
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