New page on Forex-Central.net: Central Banks

                                                                           
An understanding of the purpose and the operating methods of a central bank allows a forex trader to get a head start in predicting a probable forex trend or a currency pair trend. For many central banks, inflation is a priority. If inflation (usually measured by the Consumer Price Index) is above the central bank's target, the forex trader can expect to see tighter monetary policy. Similarly, if keeping inflation under control is not the goal, the central bank will seek to ease its monetary policy.

By combining the relative monetary policies of two central banks, a trader can then predict the trend of a currency pair. If a central bank raises its interest rates, while another one maintains its rates, the currency whose rate increases is likely to appreciate against the other currency (barring unforeseen circumstances).

Read about the Central Banks