E Why It Pays To Read Central Bank Statements

Take another example regarding the Bank of England’s (BoE) interest rates discussions – up until now, the BoE has proceeded with caution, with no signs of a rate rise any time soon. However, in light of a recent uptick in inflation, there were remarks from Sir David Ramsden, deputy governor for banking and markets at the BoE, and interest-rate setter Michael Saunders, which signaled a potentially earlier than expected tightening of monetary policy. This marked a more hawkish shift for Saunders in particular; it was a great expression of the near-term strength of GBP.

Trading is about more than just the numbers

Although it can be quite sometime before remarks like these are priced into the markets, comments and tone really do set the mark for traders and investors. That is why it is vital for individuals to commit to reading central bank statements in full, whether from the Fed or the BoE, in order to see the bigger picture.

Granted, these documents might not be the most scintillating reads, and many will be tempted to read a short bullet-pointed analysis. However, I would urge traders to read these statements in full, as doing so is the best way to hear key economists and figures in the central banks offer their take on monetary policy. Not only will these comments provide some all-important context to the details skimmed over by a precis, but they will also enable traders to take note of comments that may not be immediately pertinent yet will go on to become relevant later.

Ultimately, becoming well-acquainted with the finer nuances of central bank statements should equip traders with the tools they require to make fully informed decisions, not to mention a ‘gut feel’ for what sways the markets.

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William K. 2 months ago Member's comment

Certainly this is very good advice, to quote an ancient adage, "To be for-warned is to Be For-armed", and certainly it is true here.Especially since the choices and actions may often run counter to wise thinking, being warned ahead of the act makes one better prepared to survive the act.