Colin Wu, a journalist covering cryptocurrency news, reports that the European Central Bank (ECB) has announced a 25 basis points interest rate cut, its first in five years.
This decision comes as inflation is projected to be at 2.5% in 2024, gradually decreasing to 1.9% by 2026. GDP growth forecasts also anticipate a 0.9% rise in 2024 and a 1.6% increase in 2026. This move, which was expected by financial markets, marks the first 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 highlighting the data-driven approach taken by the council. Lagarde emphasized that decisions would be made on a meeting-by-meeting basis.
Lagarde disclosed that while there was unanimous consent on the data-driven strategy, one member chose not to vote, although their identity was not revealed. The governing council reaffirmed their dedication to analyzing the inflation outlook, underlying inflation, and monetary policy transmission.
With the news of the rate cut, there is speculation in the market about the possibility of further cuts. Economists are predicting two additional cuts in the near future. This decision aligns with a global trend, as the Bank of Canada recently made the first major central bank interest rate reduction of the year, leading to speculations of a similar move by the ECB.
In addition to the macroeconomic situation in the European Union, analysts at QCP Capital suggest that the U.S. jobless claims report released today and the upcoming CPI release could potentially drive Bitcoin to new record highs.
QCP Capital also indicates that market momentum may increase if potential rate cuts are taken into account. This sentiment mirrors recent actions by central banks worldwide, showcasing a collective effort to navigate economic uncertainties. The ECB is expected to follow suit with a similar quarter-point rate cut.
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