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Central Bank Members – Their Market Impact
We just have a quick question from Dion asking us whether non-voting policy members in Central Bank Committees, whether they can also impact currency prices?
The answer to that question Dion is absolutely they can.
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If we just quickly go to the Forex Source terminal, open up the currency research section. You can see in our Central Bank Analysis section we have a cheat sheet for both the ECB, the Bank of England as well as the Fed. Now if we quickly open up the one for the Fed we can see a very important point there at the bottom saying that “Non-voting reserve Bank Presidents attend the meetings “of the committees, participate in the discussions “and contribute to the committee’s assessment “of the economy policy options.”
Now that is a very, very important point, which means that these guys, even though they might not be voters for a particular season, or a particular year, they do still have an impact in the overall decisions that the committee makes by being involved in discussion and obviously being able to voice their opinions.
Now, the biggest way that these ones normally impact the market is looking at the current policy stance, so whether it is a dove, whether it is a neutral member, or whether it’s a hawk.
So obviously the biggest impact will be when a hawk suddenly comes out and says something extremely doveish, or when a dove comes out and says something extremely hawkish, or a neutral member comes out and says something extremely doveish or hawkish either way.
So, yes they can definitely impact policy, impact the markets, obviously voting members will have a much bigger authority in terms of the market impact, but a non-voter can also see quite a lot of market impact if they come out with a very, very extreme opposite view of the current policy stance.