Bank of Canada Cuts Interest Rate: Implications for Bitcoin
The Bank of Canada embarked on a major monetary policy by reducing its benchmark interest rate by 25 basis points.
Coming Economic Crisis: Markets and Bitcoin Startup
Many economists and financial market experts have been waiting for this move for a long time. This was based on the assumption that Canadian policymakers were satisfied with the current direction of inflation in the region.
They had equally expressed their 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 those standards, the Bank of Canada is now the first among the G-7 central banks to pioneer an easier monetary policy cycle after a years-long struggle to cool inflation. According to the bank’s Governor Tiff Macklem, stakeholders should find it “reasonable to expect further cuts in policy rates”, but only if inflation continues to fall.
The decision put pressure on the Canadian Dollar (CAD) as lower interest rates attract fewer foreign capital inflows. Similarly, Bitcoin (BTC) has seen an improvement in its price as lower rates generally help risky assets rise. At press time, the top digital currency was trading at $71,461.26, up 2.01% in the last 24 hours.
Beyond the Bank of Canada: Europe and the United States
There are expectations among economists that the European Central Bank (ECB) will also follow this trend. Based on this, it will secure the position of the second of the major central banks at its meeting tomorrow.
In the case of the Federal Reserve, some members think the bank may not implement any rate cuts this year. On the other hand, some traders expect the Fed to cut interest rates as early as November, following data showing that US inflation is slowing and the employment market is weakening.
With the BoC’s latest decision, the interest rate gap between the BoC and the US Federal Reserve has widened, considering that the Fed’s base interest rate is 5.0% – 5.25%.
If the economic outlook of these countries bottoms out and the rate cut does not impact as predicted, Bitcoin adoption rate is likely to increase. Investors are likely to view crypto as a hedge against impending inflation. Crypto market analysts generally see the possibility of Bitcoin rising to $100,000 before the end of this year, based on PlanB’s previous predictions.
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about real-life applications of blockchain technology and innovations to ensure mainstream acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based media and sites. Benjamin Godfrey is a lover of sports and agriculture. follow him excitementLinkedIn
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