Disclaimer: Forex trading involves high risks, with the potential for substantial losses and is not suitable for all persons. The views expressed in this blogsite are those of the author(s) and do not necessarily reflect the official policy, position, or opinions of Global Forex Trading. Excerpt from: Foreign Exchange Rates
|  | | August 07, 2008 | | Sterling falls against euro in forex trading | Both the Bank of England and the European Central Bank are keeping interest rates on hold for now. Despite slowing economies in Britain and in the eurozone, central banks on the other side of the Atlantic remain focused on inflation.
The move continues a delicate dance (similar to the one done by the Federal Reserve in the US) in which central bank officials try to balance the opposing forces of economic slowdown with increased inflation. The hope is that by keeping interest rates the same, inflation will peter out in the coming months, while the economy is not hurt too much.
Cutting interest rates often fuels inflation along with economic growth. Boosting interest rates is a way to limit inflation. When an economic slowdown is combined with inflation, it makes what to do with interest rates a difficult decision.
| Topic Tags: BOE rates, ECB rates, euro forex trading, forex trading, inflation, interest rates, sterling forex trading, US Federal Reserve | |
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