Influence Of Central Bank Interest Rates On The Forex Market Part 2
Conducting a monetary and credit policy, the central bank of any state uses certain levers of influence that is tools which allow it to reach the put target reference points. The percentage policy is one of such tools inherent in almost all monetary and credit systems of the world. Regulating cost of money through the interest rate, the central bank can influence the major macroeconomic variables: level of savings and investments in economy, inflation, demand for financial assets, movement of capitals, etc.
Maintenance of size of percent at an optimum level allows to provide stability of a monetary and credit system of the country, profitableness forming on operations of the banks, providing attraction of population resources by them (first of all) and subjects of managing and minimizing risk of outflow of means of clients promotes development of economy and achievement of target reference points of a monetary and credit policy of central bank such, for example;
* profitableness forming on operations of the banks, providing availability of a bank loan to effectively working subjects of managing;
* prevention of inflow of considerable volumes of speculative capital and forming in the market of profitableness which can’t be provided by national economy and bank system on a steady basis
* stimulation of banks as much as possible operatively to solve current liquidity problems
* forming of expectations of the market that such practice of an establishment of rates will remain in medium-term prospect
It is necessary to notice especially that the central bank performs operations on financial market without the commercial approach and income acquisition or restriction of losses (for example, on operations on acceptance of means in deposits) doesn’t set as the purpose. Bank operations can carry both profitable and unprofitable character depending on an orientation of operations conducted by it in the market. The question of profitableness of operations isn’t put on the foreground by any central bank. Main is an achievement of strategic targets of a monetary and credit policy.
It is necessary to note the following prominent aspect of a percentage policy conducted now: in absolute majority of the countries with the developed economy interest rates on tools of a monetary and credit policy of central bank are formed round a base rate.
If you want to participate in forex trading should start from learning the basics of currency exchange market to make sure you do not experience problems with this industry.