Inflation is the rate at which purchasing power erodes. In modern central banking, inflation reports are the single biggest catalyst for currency volatility because central bank interest rate decisions are directly tied to inflation targets.
Course 09 · Lesson 04
Inflation and Forex
~8 min read•Lesson 04/14
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Inflation reports (CPI/PCE) trigger immediate currency repricing based on interest rate expectations.
Central banks react to Core inflation rather than headline spikes.
KEY TERMS
CPI (Consumer Price Index)
The benchmark measure of change in the price of a basket of consumer goods and services.
Core CPI
CPI excluding volatile food and energy prices - the preferred underlying inflation measure.
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