Interest rate
Updated 2026-09-20
Definition
The price of money set by the central bank: the main driver of exchange rates.
Why it matters
Higher rates make holding a currency more rewarding and tend to strengthen it; lower rates the opposite. What matters most are expectations and surprises against them.
Practical example
The ECB cuts rates by more than expected: the euro tends to weaken and EUR/USD to fall.
Learn more
Course lesson: Fundamental analysis and the economic calendar: what moves currenciesRelated entries
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Educational content, not financial advice. Trading involves risk.