The ECB pivots towards growth
It is important to note that the word “you” means “you”. ECB’s decision Reflects a growing concern over the economic health of Eurozone. After initially being a focus of attention, inflation is expected to drop to just 1.9% in 2026. Nevertheless, GDP projections of only 0.9% growth in 2020 and 1.6% by 2026 suggest a sluggish economy. Lowering interest rates is the ECB’s way of stimulating borrowing and investment. It could be a boost to the Eurozone’s growth engine.
In five years the European Central Bank (ECB) has reduced rates by 25bps. The ECB anticipates that inflation will be at 2.5% by 2024, 2,2% by 2025 and 1,9% in 2026. GDP growth in the next three years is predicted to be 1.4%, 0.9%, and 0.9% respectively. https://t.co/vtft9WFAX7
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Cryptocurrency Bonanza?
The ECB calming down has sparked excitement in the community of cryptocurrency. A weaker Euro is usually a result of lower interest rates. In turn, this could make assets denominated in dollars, such as Bitcoin, more appealing to investors looking for diversification or a hedge against rising inflation. Analysts say that, in combination with possible future rate reductions, this could drive Bitcoin to new levels.
Crypto analysts say that the market craves signals and ECB’s decision is a sign of a shift in global monetary policy towards a looser one. The market is hungry for signals, and the ECB’s move could be a clear indication of a global shift towards looser monetary policy.
A Symphony Of Central Banks
The ECB decision comes after a similar one by the Bank of Canada. It was the first large central bank this year to reduce rates. Central banks are coordinating their efforts to show that they’re concerned about an economic downturn.
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The US Federal Reserve is also under pressure to relax policy. This could create a global synchronized shift in favor of monetary stimuli, creating the perfect storm that would lead Bitcoin upward.
As of the date this article was written, Bitcoin was trading at $71,168, Data from Coingecko show that the average daily increase is between 0.3% and 4.5%.
The featured image is from Business Standard. Charts are from TradingView.
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Source: www.newsbtc.com