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Interest Rate Smoothing/Matching

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Interest Rate Smoothing/Matching

  • This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 20, 2021 at 1:19 pm #611085
    grahamegan
    Member
    • Topics: 20
    • Replies: 81
    • ☆☆

    Hi John

    I understand that interest rate smoothing is when central banks gradually increase rates over a period of time and not all at once for various economic stability reasons

    Matching is asset and liability management in relation to maturity periods but what is having a balance of fixed and variable rates known as, would this come under matching also or is it something different?

    Thanks
    Graham

    February 20, 2021 at 2:38 pm #611096
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54656
    • ☆☆☆☆☆

    In relation to interest rate risk management, matching is not related to maturity periods.

    For a good explanation of matching and smoothing, see the following technical article on the ACCA website:
    https://www.accaglobal.com/uk/en/student/exam-support-resources/fundamentals-exams-study-resources/f9/technical-articles/hedging.html

    February 20, 2021 at 4:26 pm #611106
    grahamegan
    Member
    • Topics: 20
    • Replies: 81
    • ☆☆

    Thanks very much for attaching the article John

    Graham

    February 21, 2021 at 8:11 am #611148
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54656
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Interest Rate Smoothing/Matching’ is closed to new replies.

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