Don’t know if you caught this little bit of news this morning. But it seems that the first major economic power has started raising its federal interest rate.
Australia’s Central Bank raised its key cash rate by 25 basis points (0.25%) today, becoming the first of the G-20 banks to do so.
The expectation is that this is the first of many interest rate hikes to come across the globe in the very near future.
Read on to discover how this will affect you and all other Traders and Investors
The question then becomes was this a sign of economic recovery, a hedge against inflation, or both?
The United States Fed, and its G-20 counterparts, use their core Interest Rates to influence the economy, to spur economic growth (or to limit economic shrinkage), and to combat inflation and deflation.
The hope is this is a sign of economic recovery, which has been slow in coming.
So what does this mean for YOU, the Trader or Investor?
Quite a bit. You probably know that interest rate changes affect the stock markets.
Indeed, the Trader’s Best Friend – VOLATILITY – is often the result of interest rate changes.
When the US Fed begins increasing interest rates, look for massive downward pressure on the Markets.
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