![\"\"](\"https:\/\/www.mytradingland.com\/uni\/wp-content\/uploads\/2024\/08\/interest-rate-2.png\")
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An Interest rate can be defined as “the price of money” meaning an interest is the cost you pay for borrowing money, or the fee you’re paid for lending out your money.<\/p>\n
Interest rates are so important that they affect the exchange rates of all currency pairs & also affect the prices of stocks.<\/p>\n
How? well, when the central bank of a country with a healthy economy<\/strong> increases it’s interest rate, its currency becomes stronger<\/p>\n On the flip side, when a healthy economy lowers its interest rate, its currency becomes weaker.<\/p>\n Let us look at an example<\/strong><\/p>\n If the United States Federal Reserve Board were to cut interest rates, the US Dollar will become less desirable to investors who earn interest from their investments.<\/p>\n This will cause the investors to sell off their US holdings\/assets, and reinvest the money into other economies that will offer them a higher interest rate payment.<\/p>\n For investors to invest in US denominated assets, they must convert their currency into US Dollar.<\/p>\n So if these investors choose to leave, they reconvert their money into another currency to enable them invest elsewhere<\/p>\n This will mean a lesser demand for the US Dollar, causing it to weaken.<\/p>\n Now back to our discussion, when a currency weakens it shows on the forex charts because when paired against a stronger currency, the exchange rate becomes higher.<\/p>\n The central bank of a country is responsible for fixing interest rates for its currency. <\/p>\n The central bank has a Monetary Policy Committee or Governing Council that sits every month to look at economic data such as inflation, unemployment, etc. then use this data to determine interest rates.<\/p>\n The central bank could choose to cut, hike, or leave interest rates untouched.<\/p>\n The central banks usually publish calendars on their website detailing the next Monetary Policy Committee (MPC) meeting will hold. <\/p>\n You need to visit the central banks website to get this information. <\/p>\n See below an extract of the European Central Bank (ECB) Governing Council meeting Schedule:<\/p>\n The United Stated federal Reserve Board calendar can also be found on their website https:\/\/www.federalreserve.gov\/newsevents\/calendar.htm <\/p>\n See below a screenshot of the US Federal Reserve Board Calendar of Meetings: You can search the calendar using different filters but we have highlighted FOMC meeting in red because that is what to look for, when searching for interest rate meeting dates.<\/p>\n","protected":false},"excerpt":{"rendered":" An Interest rate can be defined as “the price of money” meaning an interest is the cost you pay for borrowing money, or the fee you’re paid for lending out your money. Interest rates are so important that they affect the exchange rates of all currency pairs & also affect the prices of stocks. How? […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-771","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\nWho Determines Interest Rates of a Currency?<\/h2>\n
How Do I Know When the Central Bank Will Meet?<\/h2>\n
![\"\"](\"https:\/\/www.mytradingland.com\/uni\/wp-content\/uploads\/2024\/08\/interest-rate-calendar.png\")
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\n![\"\"](\"https:\/\/www.mytradingland.com\/uni\/wp-content\/uploads\/2024\/08\/fed-reserve-calendar.png\")
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