Forex glossary
Central Bank Rate Decision
A rate decision is the central bank's authorized body's formal setting of a monetary-policy rate or target range. It may raise, cut or hold the rate. Explanations and accompanying projections help assess the stance but do not guarantee future changes or a particular exchange-rate direction.
Illustrative example
How does it work in practice?
Suppose a central bank holds its rate at 4% while a calendar survey expected a cut to 3.75%. The unchanged rate surprises that forecast; the currency response still needs a separate assessment.
A case to work through
A hold still carries information
At a fictional meeting, the rate stays 4% against a 3.75% forecast.
- The change from the previous rate is zero.
- The difference from forecast is +0.25 percentage point.
What follows? Label policy change and surprise separately.
Example boundary: This does not establish currency response.
A useful distinction
Central Bank Rate Decision / Hawkish vs Dovish
A decision has formal status; hawkish or dovish is a relative interpretation.
Check your understanding
Separate an adopted rate change from forecast surprise.
Show the answer and explanation
A +0.5-percentage-point forecast surprise
That is surprise rather than a hike.
Reading central-bank decisions
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Read the fuller explanation
Related terms
Sources and documentation
- Policy interest rate – Bank of Canada
Identifies the Bank of Canada's policy rate and announcement versus effective timing.
Document read: - Federal Open Market Committee – Federal Reserve
Describes the FOMC's role and federal funds rate as a distinct market measure.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.