A possible boon for Bitcoin prices might be a soft landing for interest rates in main economies.
On Wednesday morning, the Bank of Canada decreased its benchmark overnight rate by 25 basis points to 4.75%, as anticipated.
Economists were expecting the decision since Canadian officials have previously shown contentment with inflation’s trajectory while expressing some worry about a slowdown in economic growth.
In prepared comments given after the decision, Bank of Canada Governor Tiff Macklem said, “[It is] realistic to foresee future drops to our target interest rate” if inflation remains low.
After fighting inflation for years, the Bank of Canada is finally starting a period of looser monetary policy with its decision today, making it the first of the G-7 central banks to do so. At its meeting tomorrow, economists anticipate that the European Central Bank will ease its fiscal policies, making it the second major central bank to do so.
Even though some US Federal Reserve members have hinted that the bank would wait until 2024 to decrease interest rates, new economic data shows that growth and inflation have slowed. According to CME FedWatch, traders have presently priced in a near-60% possibility of a rate decrease either before or during the Fed’s September meeting.
Bitcoin and other risk assets face more competition for investor money when interest rates are raised, which is a negative development while all other factors remain constant. As a cycle of reduced interest rates in Western nations seems to be drawing near, bitcoin bulls may soon aim for the cryptocurrency’s all-time high from March, which was around $73,500.
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