Interest Rates

Interest rates trading

Discover short-term trading opportunities by trading on interest rate price movements at City Index as either a CFD trade or spread bet.

Why trade interest rates with City Index?

 

Our performance in numbers

0.1 m+
account holders*
1 .5k+
markets
0.55 s
average execution speed
50 %
of trades successfully executed

*StoneX retail trading live and demo accounts globally in the last 2 years.

What interest rate markets can I trade?

With your City Index account, you can trade CFDs or spread bet on three short-term interest rate markets: short sterling, Eurodollar and Euribor. All come with margin of 20% and spreads starting at just 0.02 points.

Learn more about interest rate CFDs or spread betting on rates.

Ways to trade interest rates

Spread betting Interest rates spread betting
CFD trading Interest rates CFDs
Best for
Tax-free trading in UK*
Hedging
Trade type
£ per point
Buy/sell CFDs
Tax
No UK Capital Gains Tax (CGT) or Stamp Duty*
No UK Stamp Duty. You do pay UK CGT but losses can be offset against tax*
Trade on
Global indices, FX, shares, commodities and more
Global indices, FX, shares, commodities and more
Commission
Commission-free
Share CFDs only

What are interest rates?

Interest rates are one of the financial world's most trusted safe havens in times of volatility, with competitive spreads from just 0.02pts.

Learn more about interest rates

What are interest rate announcements?

Interest rate announcements are key events in any trader's economic calendar, as they’re the dates that central banks report changes to their base rate. Both the build-up to these days, and the day itself, can see significant movements in financial markets as trades are opened, closed or adjusted.

Interest rate announcement frequencies change between central banks. For example, the Bank of England has 8 annual rate announcements, while the People’s Bank of China has 12.

Here’s a rundown of the announcements for each of the major central banks.

Region/Currency

Central Bank

Committee

Number of members

Annual Meetings*

UK/GBP Bank of England BoE Monetary Policy Committee 9 8
Eurozone/EUR European Central Bank Governing Council of the ECB 25 8
US/USD Federal Reserve Federal Open Market Committee 12 8
China/CNY People’s Bank of China PBoC Monetary Policy Committee 14 12
Switzerland/CHF Swiss National Bank SNB Governing Board 3 4
Japan/JPY Bank of Japan BoJ Policy Board 9 8
Australia/AUD Reserve Bank of Australia Reserve Bank Board 9 11

*Monetary policy meetings only.


What is the impact of interest rate announcements?


The impact of interest rate announcements will depend on whether a central bank decides to increase or decrease its base rate.

Markets rising
Markets rising

The effect of increasing interest rates

By increasing interest rates, a central bank is looking to stabilise inflation by making it more expensive for people to borrow money. This encourages people to save, so consumers will tend to spend less.
If people are spending less on goods and services, then their prices tend to rise more slowly, which should then lower the rate of inflation.
Decline
Decline

The effect of lowering interest rates

By lowering interest rates, central banks are aiming to encourage spending and provide a boost to the economy. Lower interest rates make it less worthwhile to leave capital in a bank account, so people are more willing to spend their money and borrow to make big purchases.
This increased spending throughout the economy stimulates growth and can lead to prices increasing from growing demand.

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What are interest rates?

Interest rates are one of the financial world's most trusted safe havens in times of volatility, with competitive spreads from just 0.02pts.

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Interest rates trading FAQ

How do you trade interest rates?

To trade interest rates, you need to follow these five steps.

  1. Open a trading account. Getting a City Index account is free and usually takes minutes
  2. Add some funds, so you can start trading interest rates immediately
  3. Choose the interest rate market that you want to trade and decide whether to go long or short on it
  4. Decide how much you want to risk on your position, and set up your stop loss and take profit orders accordingly
  5. Execute your order

If the interest rate market moves in your chosen direction, you’ll make a profit. If not, you’ll make a loss. You can also trade interest rates with zero risk to your capital using our free demo trading account.

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What interest rate markets can I trade?

With your City Index account, you can trade CFDs or spread bet on three short-term interest rate markets: short sterling, Eurodollar and Euribor. All come with margin of 20% and spreads starting at just 0.02 points.

Learn more about interest rate CFDs or spread betting on rates.

Was this answer helpful?

What does it mean to trade interest rates?

Trading interest rates means opening a short or medium-term position that makes money if rates rise (if you’re long) or fall (if you’re short). Interest rate trading is based on the prices of interest rate futures, which reflect where the markets expect rates to head next.

As with any form of trading, you’ll earn a profit if the underlying market moves in your favour, and a loss if it moves against you. Many traders use interest rates as a ‘safe haven’ market to protect their portfolio against volatility.

Learn more about how to trade interest rates.

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