FOREX THEORY
Round and Round with Monetary
Policy Cycles (Part 2)
Just the idea of something like
that happening would disrupt not only the individual trader, but the economy as
a whole.
That’s why we normally see interest
rate changes of .25% to 1% at a time. Again, remember that central banks want
price stability, not shock and awe.
Part of this stability comes with
the amount of time needed to make these interest rate changes happen. It can
take several months to even several years.
Just like forex traders who collect
and study data to make their next move, central bankers do a similar job, but
they have to focus their decision-making with the entire economy in mind, not
just a single trade.
Interest rate hikes can be like
stepping on the brakes while interest rate cuts can be like hitting the
accelerator, but bear in mind that consumers and business react a little more
slowly to these changes.
This lag time between the change in
monetary policy and the actual effect on the economy can take one to two years.
 Just the idea of something like that hap...){kind=link}
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