An economic calendar is used by investors to monitor market-moving events, such as economic indicators and monetary policy decisions. Market-moving events, which are typically announced or released in a report, have a high probability of impacting the financial markets.
An economic indicator is a statistic that conveys certain information about economic activity. Economic indicators allow investors to analyses the economic performance of a state, country or region, as well as make forecasts about future performance.
Economic indicators are usually released by governments, international organizations and private research firms.
Monetary policy refers to the process by which central banks and other monetary authorities control the money supply. Each country and the economic region has a monetary authority that seeks to promote stability and economic growth within its jurisdiction. One of the ways a monetary authority might do this is by adjusting (either increasing or decreasing) interest rates.
Central banks and monetary authorities meet several times each year to discuss current market conditions and determine whether or not monetary policy needs to be adjusted to achieve the desired result of stability and growth. These events are outlined in the economic calendar.
For example, the European Central Bank (ECB) meets every month to discuss monetary policy and determine the appropriate interest rate. The ECB’s Governing Council announces the interest rate decision after the meetings. Investors use the announcement to not only hear about ongoing policy developments but to forecast future ones.
Monetary policy is formulated and released by central banks and monetary authorities only.