FOREX THEORY
Round and Round with Monetary Policy Cycles
For those of you that follow the U.S. dollar and economy
(and that should be all of you!), remember a few years back when the Fed
increased interest rates by 10% out of the blue?
It was the craziest thing to come out of the Fed ever, and
the financial world was in an uproar!
Wait, you don’t remember this happening?
It was all over the media.
Petroleum prices went through the roof and milk was priced
like gold.
You must have been sleeping!
Oh wait, we were just pulling your leg!
We just wanted to make sure you were still awake. Monetary
policy would never dramatically change like that.
Most policy changes are made in small, incremental
adjustments because the bigwigs at the central banks would have utter chaos on
their hands if interest rates changed radically.
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