Central Bank Interest Rates
Interesting fact: there are successful traders who are genuinely surprised that at lower refinancing rate of the national currency may rise. Nevertheless, it is. Mashable is likely to agree. If you know in what case it happens, you can safely proceed to sign up for the recovery of spreads on the site and opening a trading account in the company of fxcm. Otherwise, we recommend you first read this article. Every developed country implements its monetary policy, whose ultimate goal is economic growth.
Conductor it is the central bank. Discount rate or refinance rate – an important management tool used the central bank. There are other rates, such as repo rate, the overnight rate, etc., but their essence is the same. This rate, under which central banks lend to commercial banks. For simplicity, all bets will be denoted by one term – Official rate securities.
" There are two types of money markets – the wholesale and retail. Wholesale market participants are investment banks, investment funds and companies – large investors. In the wholesale market they serve more often as sellers money. Banks, retailers (commercial banks) to buy money and then sell them to retail borrowers at higher interest rates. Of particular market participant – the Central Bank. Feature of his that he can immediately meet the demand of the commercial bank on the money. And he makes exactly as much money as you need at a particular time to maintain liquidity. And thus limits the speculative growth cost of credit. At this moment, there are several issues: 1) Is not the market has to adjust interest rates in the market economy? 2) why the Central Bank intervenes in the process of pricing in monetary market? 3) How is strongly influenced by the Central Bank on the monetary market? Let's start with the last question.