Unexpected rate hikes push down commodity prices – research
The most traded commodities are more vulnerable to monetary policy shocks, BoE paper shows
The liquidity and price of commodity futures drop following an unexpected interest rate hike, a paper from the Bank of England has found.
The paper, published on January 24, examines the movement in prices and trading volumes of 19 commodity futures in response to “monetary policy surprises” from the US Federal Reserve between 2000 and 2008.
The authors – Miruna-Daniela Ivan, Chiara Banti and Neil Kellard – note that the trading volumes and prices of commodity futures decline after unexpected rate
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