An increase in a central bank's benchmark interest rate. Because central bank credibility and policy direction move markets more than almost anything else, terms like this are watched closely by traders of every experience level.
An increase in a central bank's benchmark interest rate. Because central bank credibility and policy direction move markets more than almost anything else, terms like this are watched closely by traders of every experience level.
It generally strengthens a currency by making it more attractive to yield-seeking capital. New traders benefit from internalizing this early, since it underpins much of the terminology and reasoning used throughout the rest of their trading education.
Currencies often rally on confirmed or expected hikes. It shows up in day-to-day trading through price charts, broker platform data, or news commentary, and recognizing it quickly can meaningfully shape decision-making in the moment.
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