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Chapter 21, Part IV. Central Bank Representatives. Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 22, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Commander in Pips: Well, that’s important. This decision is made by a vote of the Board of the Central Bank. Results of voting are usually public. So, you may see how many bankers were for hiking of therate and how many against this. Even more, usually the members of the Board are chairmen of some Reserve Bank, say Philadelphia Fed Reserve. They are also public persons and often give an interview, where each expresses his or her own opinion on the overall economy. This opinion is not always in a row with overall Fed Reserve policy, since bankers watch the current situation differently – some of them think that it’s time to struggle against inflation and start to hike rates, while others think that growth is too anemic and it’s better to hold interest rates low. Sometimes former view is called “hawkish” and latter is called “dovish”. Dovish opinion assumes priority of growth and low interest rates over inflation. Also they are the followers of smooth action on specific events in economy. A Hawkish view is a vice versa - assumes low inflation as a primary task.

    So, when a Central Bank changes their view on some important data, that assumes more probability of hiking rates, usually it calls that Central bank now is more hawkish. For instance, if the Fed will suddenly say that they see solid risk of rising inflation, even if they will not raise interest rate – this will be clear sign that Fed Reserve becomes more hawkish.



    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.




    Note: FPA ranks are earned in the battles against scam, not in the classroom.
     
    #1 Sive Morten, Dec 22, 2013
    Lasted edited by : Sep 25, 2016
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