An interest rate is the cost of borrowing a currency, set by its central bank. Higher rates tend to attract foreign capital and lift a currency, while cuts often weaken it. Rate expectations are one of the biggest long-term drivers of forex prices.
Forex Term
Interest Rate
The rate set by a central bank that drives currency value.
Example
A surprise interest-rate hike can push a currency sharply higher within minutes.
Related Terms
Recommended Brokers
Forex.com
Best for US Traders
Visit Forex.com
Trading Forex and CFDs involves a significant risk of loss.
Risk
Forex and CFD trading involves significant risk of loss and is not suitable for all investors. Leverage can work against you. This content is educational and not financial advice — always do your own research.