MONETARY POLICY

Alright so we covered the crucial role of the central banks, the interest rates, and the inflation.

But without the monetary policy, the central banks would not be able to maintain the price stability and the economic growth of a country.

Central banks use the monetary policy to control a lot of things but i will only mention the most important ones and these are the ones you should focus on.

1. Lending to commercial banks
2. The money supply
3. The rise in inflation
4. The amount of balance that commercial banks must have on hand in cash – Reserve requirements.

So although this will affect a currencies strength and how it will compare to other currencies. This data can sometimes take a few months to kick in, that is why we always put most emphasis on our technical analysis and price action.