The Relationship Between Stockmarket and the Interest Rate.

The Relationship Between Stockmarket and the Interest Rate.

  • Submitted By: leechialin
  • Date Submitted: 02/23/2009 7:55 PM
  • Category: Business
  • Words: 276
  • Page: 2
  • Views: 490

stock market is actually has the negative relationship with the interest rate. when the interest rate is increase, the stock market will actually rally, this is due to the condition or circumstances of the economy in the country. inflation occur when the economy is good and with the vast investment and expansion done by the country might force the money supply to be tighten and hence increase the interest rate. hence, we can actually said that the period when the interest rate is increase indicate the good economy in a country. this reflect by the rally of the stock market and the appreciating of all those stocks in the market. on the other hand, the slow economy might force the money supply higher than the demand and hence drive the interest rate to be low. when the interest rate start decreasing, it is actually mean that the economy is actually on its midway of deteriorating. Normally government only will alter the interest rate after a few months of observation and under the tight surveillance. Hence, the lag of the policy maker to make the decision had actually drive the interest rate to alter in the midway of the economy. We can do a conclusion here by knowing when the interest rate to be maintained, that's the time we long or short the future. this is the indicator as the interest rate is keep maintaining, there is actually the stagnant period for the economy to recover and hence i strongly believed that by eyes on the interest rate, we can get to know the economy;s condition and hence make the profit by the indicator.

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