Central Banks in forex
Central banks set the price of money. By raising or cutting interest rates and signalling where rates go next, they are the single biggest driver of currency value. The gap between two central banks’ paths is what drives the pair between their currencies.
These guides cover how the Fed, ECB, BoE and the rest read incoming data, how to interpret their statements and projections, and how to turn a rate decision into a currency view.
Guide
1 in-depth guide on central banks.
Key terms
Plain-language definitions of the terms behind central banks.
Dot Plot
What is the Fed dot plot? The quarterly chart where each Fed official marks where they expect interest rates to be, the market's clearest map of the intended rate path.
Forward Guidance
What is forward guidance? A central bank's communication about the likely future path of interest rates, used to steer markets before policy actually changes.
Hawkish vs Dovish
What do hawkish and dovish mean? Hawkish means a central bank leans toward higher rates to fight inflation; dovish means it leans toward lower rates to support growth.
Quantitative Easing (QE)
What is quantitative easing? Large-scale central bank asset purchases that inject money into the economy, typically weakening the currency; QT is the reverse.
Terminal Rate
What is the terminal rate? The peak policy rate markets expect a central bank to reach in a hiking cycle, and one of the strongest anchors for a currency's direction.
Releases that move this
The scheduled data and decisions where central banks show up in price.