An important banking player in the financial markets

Why Central Banks Are Important? Currency prices and inflation are affected because they determine the monetary policy of the country in which they are located, which has a direct impact on interest rates. The central bank aims to stabilize the local currency, maintain stable GDP growth, reduce the unemployment rate and improve the overall economic health of the country. Companies need a stable economic environment to succeed, and international companies in particular are very sensitive to face foreign exchange risk.

Some important aspects of risk management include setting stop losses, sizing positions, profit: risk ratios, and taking into account other charges such as spreads and processing costs. All of this affects your trader’s account balance and winning percentage.

1. Federal Reserve System (Fed)

The Federal Reserve System, the central bank of the United States, has a history of more than 100 years and aims to build a stable financial system for the country. President Wilson enacted the Federal Reserve Act in 1913 and created the Federal Reserve System. The Federal Reserve is responsible for making fiscal policy decisions aimed at growing the United States economy. The Federal Reserve controls banks and other important financial institutions. The Federal Reserve is governed by a committee governed by the chair. The current chair is Janet Yellen and the term of office is until February 2018. She is also the representative of the Federal Open Market Committee (FOMC). Traders around the world are paying close attention to the announcement from the Federal Reserve, as it can have a significant impact on the currency and CFD markets.

2. European Central Bank (ECB)

The ECB, the central bank of the European Union, aims to maintain price stability within the euro area and to grow the purchasing power of the euro, a common currency. Founded in 1998, the Frankfurt-based ECB has 28 EU member states. Italian Mario Drasi is the current president of the European Central Bank and represents the executive committee appointed by the European Council.

3. Bank of England (BOE)

The Bank of England, also known as “The Company,” is the central bank of the United Kingdom. The Bank of England, which has existed since 1694 and was once maintained by individual investors, was nationalized in 1946 after World War II. In 1998, it became a public organization owned by a lawyer of the Ministry of Finance. The Bank of England is a bank that has the right to issue banknotes only in England and Wales. In 2011, it took a leading position in regulating the UK financial industry. The BOE Governor is also the chair of UK monetary policy. Its role is to prepare for UK monetary policy and oversee economic policy. The current governor is Canadian Mark Carney, the first non-British person to be appointed to this position. He was nominated by then-Minister of Finance George Osborne. The current Minister of Finance is Philip Hammond. He is tasked with financial and economic challenges at the level of the UK Government’s senior minister in a position similar to the Treasury.

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Financial markets are driven by many factors, and some central banks have widespread influence on the global economy. These are three key influencers that traders should keep an eye on for their announcements.

Since the financial crisis of 2008, central banks around the world have tried many uncommon stimuli to rebuild their economies. We have sought to increase consumer confidence by increasing the liquidity of funds in the economy by easing monetary policy and implementing quantitative easing. Investors have been more focused on central bank announcements and policies than ever before, looking for hints on the potential impacts on the market. If you are investing in a particular currency, commodity, or index in a particular country, you should also pay attention to the strategy of that country’s central bank. Get the latest information on Tickmill’s financial calendar.

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