Module 5: Fundamental Analysis
Inflation
5 min read
Inflation is the rate at which prices rise. It strongly shapes central bank policy and currency moves.
Why traders care
When inflation is above target, central banks may raise interest rates, which can support a currency. When inflation is low, they may cut rates, which can weaken it.
Markets react to inflation relative to expectations, not just the number itself.
Key takeaways
- Inflation drives interest-rate expectations.
- Surprises versus forecasts move markets.
- Central bank targets are often around 2%.
Educational content only, not financial advice. Trading forex and CFDs involves significant risk of loss.