Get 40% OFF Your First Purchase With Code FIRST40
Client loginStart nowStart now

Sessions and events

Benchmark interest rates:the rate decisions behind the market.

A benchmark interest rate is the reference rate other borrowing costs are priced from. In trading it usually means a central bank's policy rate: the Federal Reserve's federal funds target range, the Bank of England's Bank Rate or the ECB's deposit facility rate. Changes arrive at scheduled rate decisions, among the most market-moving events for currencies.

All trading lessonsRead the trading rules →

Two things called a benchmark rate

The phrase is used in two ways. The first, and the one that matters most to traders, is a central bank's policy rate: the rate the bank sets, or targets, to steer short-term borrowing costs across its economy. It is decided by a committee at meetings published in advance.

The second is a market reference rate - a published measure of what borrowing actually cost, used to price loans and derivatives. The Secured Overnight Financing Rate, SOFR, published by the Federal Reserve Bank of New York, is one: a broad measure of the cost of borrowing cash overnight against Treasury securities. Reference rates follow the policy rate closely, but nobody decides them at a meeting, so they are not the scheduled event this page is about.

The benchmark rates traders watch most

Every currency has a central bank behind it, but three decisions dominate the major pairs and gold. The FOMC page covers the Federal Reserve's committee in detail.

Three policy rates and who sets them
Central bankPolicy rateDecided bySchedule
Federal Reserve (US)Target range for the federal funds rateFederal Open Market CommitteeEight scheduled meetings a year; statement at 14:00 New York time
Bank of England (UK)Bank RateMonetary Policy CommitteeEight meetings a year
European Central Bank (euro area)Deposit facility rate, one of three key ECB ratesGoverning CouncilMonetary policy meetings on a published calendar, each followed by a press conference

Each bank publishes its meeting dates well in advance. Check the bank's own calendar for dates and announcement times; an economic calendar collects them in one place.

Why a rate decision moves currencies

A currency's interest rate is part of the return for holding it, so the gap between two countries' rates - the rate differential - feeds into the exchange rate between them. When one bank is expected to raise rates faster than another, its currency tends to be bid in advance of the decision.

That is why the decision itself often moves the market less than the guidance around it. The rate is usually anticipated from data such as the CPI release and non-farm payrolls; what moves price is any gap between the decision and expectations, and any change in what the bank signals about its next steps. See the glossary entry on the interest rate decision for the short definition.

A rate change also changes the swap charged or credited on positions held overnight, because swap reflects the interest rate difference between the two currencies in a pair.

How a decision day unfolds

The pattern is similar across the major banks. The decision is published at a pre-announced time with a statement, sometimes with economic projections; a press conference or published minutes follow. Markets often react twice: first to the headline decision and wording, then to the explanation, which can extend or reverse the first move.

  • Before: price tends to go quiet and spreads widen in the minutes before the announcement.
  • Announcement: the decision and statement are released at once, and the first move comes in seconds.
  • Explanation: the press conference or minutes add guidance, and the market reprices on it.
  • After: the move can carry into the next session, or fade as other markets digest it.

Step by step

How to identify it

Treat each rate decision as a scheduled event and do the preparation before the day, not during the announcement.

  1. List the central banks behind the instruments you trade - both currencies in a pair, and the Federal Reserve for gold and US indices.
  2. Find each bank's next decision date on its own published calendar or on an economic calendar, and convert the announcement time to your clock.
  3. Note what the market expects: a hold, a cut or a rise, and any projections or press conference attached to this meeting.
  4. Decide in advance whether you will be flat, hold through it, or wait until after the explanation, and write the rule down.
  5. Check the news trading rule for your account stage, and the swap on any position you plan to hold across the decision.

Worked example

The concept,walked through

A rate decision afternoon, described

An illustrative sequence in words, with no real rates or prices. It is not a record of any actual central bank decision.

  1. 1. ExpectationEconomic calendars show that the market expects a central bank to hold its policy rate. The currency trades in a narrow range through the morning.
  2. 2. DecisionThe bank holds, as expected. The currency barely moves on the headline, but the statement drops a phrase about future rises and it weakens within seconds.
  3. 3. ExplanationIn the press conference, the governor says future decisions depend on inflation data. Part of the first move reverses over the next half hour.

The rate itself was no surprise; the wording was. A trader who read only the headline would have expected no move at all. The event's timing was known in advance; its direction was not.

Common mistakes

Where tradersgo wrong

Trading the headline number alone

An expected decision can still move price sharply if the statement or guidance changes.

Watching only one central bank

A pair has two currencies and two banks behind it. The other side's decision matters as much.

Forgetting the explanation

The press conference or minutes can move the market as much as the decision, and later in the day.

Ignoring swap after a rate change

A change to either rate in a pair changes the overnight cost of holding it.

Limitations

What it cannottell you

No chart concept predicts price. These are the limits worth keeping in view.

  • What a central bank decides, and how markets read it, cannot be known in advance; market expectations are frequently wrong.
  • Rate differentials are one influence on exchange rates among many, and a currency can move against its interest rate for long periods.
  • The two-wave reaction described here is common but not reliable; some decision days produce very little movement.

In an evaluation

Using it on asimulated account

Rate decisions are high-impact releases. On a funded GFN account, profits from trades opened or closed within 3 minutes either side of a relevant release may be removed. News trading is permitted during evaluations, and Instant accounts start at the funded stage, so the rule applies to them from day one.

Volatility on a decision day often outlasts that window, and a stop that slips counts at its fill. On a $100,000 simulated account the daily loss limit is $3,000 on Instant or $5,000 on 1 Step and 2 Step. Holding a position overnight is permitted where the account and market allow it, and swap is charged against equity like any other cost.

Trading rule

Can I trade the news?

The ±3 minute window around high-impact releases on funded accounts.

Trading rule

What is the daily loss limit?

The ceiling a slipped stop is measured against - 3% on Instant and 5% on 1 Step and 2 Step.

Trading rule

Can I hold trades overnight and over the weekend?

Holding across a decision, and the swap that applies overnight.

Trading rule

Does slippage excuse a breach?

Why fills around an announcement differ from the quoted price.

Questions

Asked aboutthis concept

In trading it usually means the target range for the federal funds rate, set by the Federal Open Market Committee at eight scheduled meetings a year. SOFR, published by the New York Fed, is a market reference rate that tracks it closely.

Bank Rate. It is set by the Monetary Policy Committee, which meets eight times a year.

Interest rates are part of the return for holding a currency, so changes in expected rates change what traders will pay for it. What moves price is the gap between the decision and guidance and what the market expected.

Keep learning

Relatedlessons

Sessions and market events

What Is FOMC? The Fed Meeting, Explained

The Federal Reserve committee behind US interest rates: its members, its eight scheduled meetings, and how a decision day plays out in markets.

Sessions and market events

NFP Meaning: Non-Farm Payrolls Explained

Non-farm payrolls: what the number measures, what else is in the report, when it lands, and why its first seconds are the hardest to trade.

Sessions and market events

New York Session: Times and What Moves It

The US trading window: its conventional hours, its overlap with London, and the scheduled releases that make its first hours the most volatile.

Risk and performance

Risk On, Risk Off: Meaning in Markets

The shorthand for markets moving together as investors seek or shed risk - which assets usually go which way, and why the pattern breaks.

Sources

What this pagerelied on

  1. Federal Open Market Committee - Board of Governors of the Federal Reserve System. Retrieved 22 September 2026. The Committee's composition, voting rotation and remit.
  2. Meeting calendars and information - Board of Governors of the Federal Reserve System. Retrieved 22 September 2026. The 2026 meeting dates, which meetings carry a Summary of Economic Projections, and the publication of minutes.
  3. Interest rates and Bank Rate - Bank of England. Retrieved 23 September 2026. Bank Rate as the UK policy rate, set by the Monetary Policy Committee, which meets eight times a year.
  4. Key ECB interest rates - European Central Bank. Retrieved 23 September 2026. The three key ECB rates set by the Governing Council, and the deposit facility rate as the one the ECB steers policy through.
  5. Meetings of the Governing Council and General Council - European Central Bank. Retrieved 23 September 2026. The ECB's published schedule of monetary policy meetings, each followed by a press conference.
  6. Secured Overnight Financing Rate data - Federal Reserve Bank of New York. Retrieved 23 September 2026. SOFR as a broad measure of the cost of borrowing cash overnight collateralised by Treasury securities.

Educational content only, not investment advice or a recommendation to trade. Chart concepts describe what price has done; none of them predicts what it will do, and trading any strategy can lose money. Get Funded Now accounts are simulated and trade virtual funds. Last reviewed 22 September 2026.

Ready when you are

Your capital stays yours.The risk is ours.

One evaluation fee, no time limits and up to 90% of simulated profits. Pick an account size and your credentials arrive by email within minutes.

Start your challenge →Read the rules

No subscriptions or hidden fees

Payouts every 14 days

$400,000 max total allocation