When reading financial analytics and news reviews, you, as an Oman forex trader may come across some terms that can seem difficult to understand. What are interest rates and how do they relate to dovish monetary policy? We summarize a glossary of terms in a short but useful forex dictionary for novice traders to understand some terms straight from an unknown Forex dictionary. Meanwhile, you can go to http://www.arabforex.pro/en/oman/ if you need the help of trustworthy brokers in Oman.
According to the dictionary of forex is a system of actions taken by the central bank of Oman to control the amount of money in the economy and the flow therein of new money is provided.
The main objective of monetary policy is to maintain price stability by controlling inflation and creating a stable economic environment in the country.
Dovish monetary policy (monetary policy easing / quantitative easing)
According to the forex dictionary is a direction in monetary policy aims to stimulate the economy.
If the central bank of Oman sees that the economy is facing a recession, they often decide to lower interest rates. This can loosen money-lending and increase the dynamics of state finances. As a result, the economy will be revitalized. However, an increase in the amount of money can lead to higher inflation and a lower value of the currency.
Hawkish monetary policy (Tightening of monetary policy)
According to the forex dictionary is a direction in monetary policy aims to maintain economic growth and inflation in Oman and it’s for bringing greater stability.
If the central bank sees that the rate of economic growth threatens price stability, they often decide to raise interest rates. This step will limit the process of borrowing money and destabilize the financial system. As a result, the threat of inflation eases and the value of the currency can strengthen.
According to the forex dictionary, it is the portion that a borrower pays to a lender when repaying a loan, usually defined as a percentage of the loan amount.
In the context of Oman’s economy and according to the forex dictionary, the interest rate is the amount paid by private banks to the central bank in return for money loan services.