In a recent report by Colin Wu, a journalist covering cryptocurrency news, it is revealed that the European Central Bank (ECB) has made a significant move by implementing its first interest rate cut in five years, reducing rates by 25 basis points.
This decision comes at a time when projections indicate inflation to be at 2.5% in 2024, gradually decreasing to 1.9% by 2026. Additionally, there are forecasts for GDP growth to be at 0.9% in 2024 and 1.6% in 2026. This decision, which was widely expected by financial markets, marks the initial cut since September 2019 when the deposit facility went into negative territory.
The unanimous agreement to lower rates was reached by all 20 national representatives, with ECB President Christine Lagarde emphasizing the data-driven approach taken by the institution. Lagarde emphasized that decisions would be made on a meeting by meeting basis.
Lagarde mentioned that while there was consensus on the data-driven direction, one member chose to abstain from voting. However, the identity of this member was not disclosed. The governing council reiterated its commitment to analyzing the inflation outlook, underlying inflation, and the transmission of monetary policy.
In the aftermath of this announcement, there is speculation in the market regarding the possibility of further rate cuts. Economists are predicting two more cuts in the near future. This decision aligns with a global trend, as the Bank of Canada was the first major central bank to reduce interest rates this year, leading to speculation of a similar move by the ECB.
In addition to the macroeconomic conditions in the European Union, analysts at QCP Capital have suggested that today’s U.S. jobless claims report and the upcoming CPI release could potentially drive Bitcoin to new all-time highs.
QCP Capital also indicates that market momentum may increase if potential rate cuts are taken into consideration. This sentiment reflects recent actions by central banks worldwide, highlighting a collective effort to navigate economic uncertainties. It is expected that the ECB will follow suit with a similar quarter-point rate cut.
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