Skip to content

Educational content, not investment advice.

Souq Dailyسوق ديليSouq Daily

Lesson 2 of 104:005 Sources

Central banks and interest rates: the first driver

Recorded. Publishing soon

Presented by NourIn Arabic, with captions. Other languages are coming.

Educational content, not investment advice. Nour explains how markets work. She never tells you what to buy or sell.

Central banks use the policy interest rate to keep prices stable. The Fed has a dual mandate (maximum employment and stable prices) and judges 2% inflation over the longer run as most consistent with it; the ECB aims for 2% over the medium term and the Bank of England has a 2% target.

  • Interest-rate differentials are a key driver of exchange rates.
  • The FOMC holds eight scheduled meetings a year; statements, press conferences and forward guidance can move markets more than the decision itself.
  • Hawk = leans to tighter policy; dove = leans to easier policy. Every currency pair has two central banks.

Quick check

Three questions. Pick an answer to see why.

0/3

  1. 1.How many regularly scheduled meetings does the FOMC hold each year?

  2. 2.USD rates are 4% and EUR rates 2% (example). If the gap widens in the dollar's favour, what may happen?

  3. 3.The Fed holds rates as expected but signals cuts may come soon. This signal is called…

Sources

Every fact in this lesson is backed by the sources below.

  1. 1.Federal Reserve – What is the FOMC and when does it meet?The FOMC is the Fed's monetary policymaking body, has 12 members and holds eight regularly scheduled meetings per year (about every six weeks)
  2. 2.Federal Reserve – Governor Cook speech, 25 March 2024 (dual mandate, 2% goal)The Fed's mandate is maximum employment and stable prices (dual mandate); 2% inflation over the longer run is judged most consistent with it
  3. 3.ECB – Monetary policy strategyECB aims for 2% inflation over the medium term; the target is symmetric
  4. 4.Bank of England – Monetary Policy Report, August 2025The MPC sets monetary policy to meet the 2% inflation target
  5. 5.Reserve Bank of Australia – Drivers of the Australian Dollar Exchange RateThe interest-rate differential is a key driver of demand for a currency; lower domestic rates contribute to a lower exchange rate

Educational content, not investment advice. Risk warning: trading forex, CFDs, gold and crypto carries a high level of risk and may not be suitable for everyone. You can lose more than you put in. Souq Daily is an education platform. Nothing here is investment advice, a recommendation or an offer, and past performance does not predict future results.