Markets
Crypto, does the ECB interest rate cut bring a tailwind?
4h00 ▪ 3 min reading ▪ by Fénelon L.
In an unexpected turn of events, the European Central Bank announced a 0.25% cut in its key interest rates, raising hopes of similar monetary easing from the US Federal Reserve. The move could breathe new life into the crypto market.
The ECB relaunches the debate on the direction of rates
The highly anticipated meeting of the European Central Bank (ECB) surprised financial markets. Against all expectations, the Frankfurt-based institution decided to lower its key interest rates by 0.25%, marking the first reduction since 2019.
This announcement comes after a prolonged period of aggressive rate hikes aimed at curbing rampant inflation in the euro zone. Even if prices remain high, particularly for services, the ECB believes it has made significant progress in its fight against soaring costs.
The ECB lowered the interest rates on the main refinancing operations, the marginal lending facility and the deposit facility to 4.25%, 4.50% and 3.75% respectively. This strong signal sends a clear message to the markets and could thus inspire the American Federal Reserve.
Thanks to these efforts, global inflation fell to 2.6% last month, even as service prices remain stubbornly high. The ECB’s decision immediately boosted crypto assets, with Bitcoin jumping 0.80%.
All eyes are now on the Fed!
Following the ECB’s bold decision, all eyes are now on the highly anticipated meeting of the Federal Open Market Committee (FOMC) next week.
Investors will closely monitor any signals on the future direction of US monetary policy, hoping for an easing similar to that announced by Frankfurt.
Although the Federal Reserve If monetary policy has remained cautious so far, highlighting the need to remain vigilant in the face of still stubborn inflation, markets are hoping for a pause in the cycle of rate increases, or even gradual reductions in the months to come. Such a move would provide relief to investors who have been strained by this year’s aggressive monetary tightening.
Upcoming key economic figures from the United States, including this Friday’s highly anticipated jobs data and next week’s Consumer Price Index (CPI), will attract particular attention from market participants. These statistics could strongly influence the Fed’s search for balance between fighting inflation and supporting growth.
If the American central bank followed the example of the ECB and announced an accommodative turn, a real rally could be triggered in the coming months. crypto markets.
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Fenelon L.
Passionate about Bitcoin, I like to explore the intricacies of blockchain and cryptos and I share my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I firmly believe that Bitcoin is the tool that can make this possible.
DISCLAIMER
The views, thoughts and opinions expressed in this article belong solely to the author and should not be considered investment advice. Do your own research before making any investment decisions.