Colin Wu, a journalist covering cryptocurrency news, has reported that the European Central Bank (ECB) has implemented its first interest rate reduction in five years, lowering rates by 25 basis points.
This move comes at a time when inflation is projected to reach 2.5% in 2024, gradually decreasing to 1.9% by 2026. The forecasts for GDP growth anticipate an increase of 0.9% in 2024 and 1.6% in 2026. This decision, which was expected by financial markets, marks the first rate cut since September 2019, when the deposit facility went into negative territory.
The unanimous agreement to reduce rates was reached by all 20 national representatives, with ECB President Christine Lagarde emphasizing the data-driven approach taken by the council. She emphasized that decisions would be made on a meeting-by-meeting basis.
Lagarde disclosed that while there was unanimous agreement on the data-driven strategy, one member chose to abstain from voting, although their identity was not revealed. The governing council reiterated their dedication to analyzing the inflation outlook, underlying inflation, and monetary policy transmission.
The possibility of further rate cuts has sparked market speculation following the announcement. Economists are predicting two more cuts in the near future. This decision aligns with a global trend, as the Bank of Canada recently became the first major central bank to reduce interest rates this year, leading to speculation of a similar move by the ECB.
In addition to these macroeconomic factors in the European Union, analysts at QCP Capital indicate that today’s U.S. jobless claims report and the upcoming CPI release could potentially drive Bitcoin to new record highs.
QCP Capital further suggests that market momentum could strengthen if potential rate cuts are taken into account. This sentiment reflects recent actions by central banks worldwide, highlighting a collective effort to navigate economic uncertainties. It is worth noting that the ECB is expected to follow suit with a similar quarter-point rate cut.
Please note that this content is for informational purposes only and should not be considered financial advice. The opinions expressed in this article are personal and do not reflect the views of The Crypto Basic. Readers are advised to conduct thorough research before making any investment decisions. The Crypto Basic is not liable for any financial losses.