European Central Bank Drops Interest Rates Again as Bitcoin, Stocks Bounce Back
The Fed is likely to drop rates next, potentially setting up Bitcoin for another "Uptober" after a shaky start to September.
The European Central Bank (ECB) dropped the interest rate for its deposit lending facility by another 25 basis points on Thursday, reaffirming its newly dovish monetary policy stanceāand Bitcoin and major stock market indices are slightly up following the news.
The central bank expects core inflation to rapidly decline over the next two years. That said, its latest projections for economic growth are now weaker than they were in June, and economic activity remains āsubduedā due to weak private consumption and investment.
Joe Tuckey, Head of FX Analysis at Currency Specialists, told Decrypt that the latest cut was in line with market expectations.
āThe statement reinforced the data-dependent path, confirmed that inflation data is broadly in line with expectations, and lowered economic forecasts,ā he said. āThe EUR/USD remains just above chart support at 1.1012.ā
The euro strengthened slightly against the U.S. dollar last month after Federal Reserve Chairman Jerome Powell suggested that he would begin lowering interest rates.
With the Fedās next official meeting just a week away, both Bitcoin and major stock market indices are bouncing back from their slumps late last week, with the leading cryptocurrency reclaiming $58,000 on Wednesday. It's now trading for slightly under that mark, while the S&P 500 and Nasdaq are both up slightly on the day as of this writing
Generally speaking, lower interest rates are favored by markets, since they mean cheaper borrowing costs for financing investments. It also means more āmoney printing,ā in which case scarce assets like Bitcoin, gold, and real estate will appreciate against the debasing currency.
#Bitcoin went to $69,000 in 2021 when interest rates were 0.25%$BTC went to $74,000 during the fastest rate hike and tightening in history
And now central banks are starting to cut interest rates again šš„
