Bank of Canada Slashes Interest Rate: Implications For Bitcoin (BTC) Price
The Bank of Canada has embarked on a major monetary exercise, cutting its benchmark interest rate by 25 basis points.
Looming Economic Crisis: Markets and Bitcoin Kicks
Several economists and financial market experts have anticipated this move for the longest time. This was on the premise that Canadian policymakers showed satisfaction with the current direction of inflation in the region.
They had equally expressed concerns about the slow growth of the economy. It wasn’t until Wednesday morning that the benchmark rate cut finally came to fruition. The rate cut brings Canada’s interest rate to 4.75%.
By this standards, the Bank of Canada now ranks as the first out of the G-7 central banks to pioneer the cycle of easier monetary policy after a multi-year battle to cool inflation. According to the bank’s Governor Tiff Macklem, stakeholders need to find it “reasonable to expect further cuts to our policy interest rate” but this sentiment is if inflation continues lower.
The decision has weighed on the Canadian Dollar (CAD) since lower interest rates attract less foreign capital inflows. Similarly, Bitcoin (BTC) saw an improvement in it price as lower rates generally help in boosting risk assets. At press time, the top digital currency was trading at $71,461.26 with a 2.01% increase in the last 24 hours.
Beyond Bank of Canada: Europe and U.S Next
There are expectations amongst economists that the European Central Bank (ECB) will follow this trend. Based on this, it will secure the position of the second of the major central banks to ease at its meeting tomorrow.
In the case of the United States Federal Reserve, some members opine that the bank may not enforce any rate cut this year. On the other hand, some traders are increasingly expecting a Fed rate cut as early as November, following data indicating moderating U.S. inflation and a weaker jobs market.
With the recent decision of the BoC, there is a widened interest rate differential between the BoC and the US Federal Reserve considering that the Fed’s key interest rate is 5.0% – 5.25%.
Bitcoin is likely to see increased adoption rate if the economic outlook of these countries hit rock bottom should rate reduction fail to impact as projected. Traders are likely to consider the crypto as a hedge against the impending inflation. Generally, crypto market analyst sees the possibility of Bitcoin hitting up to $100,000 before the end of this year per an earlier projection from PlanB.
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The post Bank of Canada Slashes Interest Rate: Implications For Bitcoin (BTC) Price appeared first on CoinGape.
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