Rumus interest rate differential
Interest rate-growth differential and government debt dynamics. Prepared by Cristina Checherita-Westphal. Published as part of the ECB Economic Bulletin, Issue 2/2019.. The difference between the average interest rate that governments pay on their debt and the nominal growth rate of the economy is a key variable for debt dynamics and sovereign sustainability analysis. The currency markets are intertwined with the interest rate markets allowing sovereign rates to have a direct influence on the direction of a currency pair. In this lesson, we will discuss in depth how interest rates effect currency markets. Sovereign rates, which are the official interest rates issued by the government of a country, are […] The EURUSD has reached her medium term central parity at 1.1225 as curent power purchasing parity rate (PPP) by the current inflation differential and turned to downward by the current interest rate differential rate. The 1.1225 is the PPP rate or upper ceiling of disequilibrium rate and the pair is underway to equilibrium state by interest rate.