Every year, central banks meet eight to twelve times to decide whether to raise, maintain or lower their policy interest rates. They also issue Monetary Policy Reports that examine their economies, production and spending, the labour market and, of course, inflation.

These decisions matter to all of us, but particularly businesses. Interest rate changes impact the cost of borrowing, and thus influence investment decisions. Inflation erodes purchasing power and increases input costs, impacting profitability. Financial stability is essential, as it provides access to credit and protects against the risk of crises that could derail growth. Exchange rates influence import and export markets, especially those of countries that depend on importing foreign goods and services.

When a central bank announces its decision, traders watch closely for clues to what it will do next. For example, higher interest rates and quantitative easing lead to an increase in the value of a currency such as the euro, while lower interest rates or a loosening of monetary policy cause the currency to fall.

Traders also look for signals in what the central bank says in its statements and other public communications. For example, the ECB often mentions that it is “monitoring the situation” in its press releases after policy decisions, and it also gives plenty of advance notice before changing its interest rates by publishing written transcripts of MPC meetings (from 2015 onwards) outside its usual archive release schedule. These documents provide an insight into the deliberations behind each decision, including where the MPC members’ opinions converged and diverged.