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The European Central Bank (ECB) slightly reduced its record interest rate on Thursday, joining the US Federal Reserve and other central banks around the world in stepping up the fight against inflation. The central banks of Switzerland, the euro zone and the United Kingdom raised interest rates by 0.5 percentage points to combat high prices weighing on consumers in the countries.
interest rate rises to 2 %
The European Central Bank announced in a statement that it will raise its base interest rate to 2 percent from 1.5 percent, the highest level since 2009. The bank said it expects to increase [inflation] because inflation expected to remain above normal for too long.
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With inflation slowing from painfully high levels, banks' global war against rising consumer prices has slowed considerably.
More interest rate hikes are coming
Policymakers stress, however, that more hikes are on the way to contain decades of high inflation and fight rising housing, food and energy prices that are eroding people's savings.
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Additionally, investors believe major European central banks will raise interest rates more than the US Fed over the next 12 months. This is because inflation in Europe is known to be more persistent and damaging than anywhere else.
Crypto Markets React
When the US Federal Reserve announced a 50 basis point interest rate cut yesterday, the crypto market crashed along with the stock market, wiping out any gains made prior to the announcement.
The market continued its downward trend even after the ECB announcement and there are signs of further slippage due to weak resistance according to technical indicators such as the Relative Strength Index (RSI).
Currently, the price of Bitcoin, the largest crypto by market capitalization, fell from $17,800 to $17,507, while the price of the second largest crypto, Ethereum, fell from $1,315 to $1,275. Both cryptocurrencies down 1.2% after the announcement.
With interest rate announcements, Bitcoin and other major altcoins have not been able to recoup earlier losses and are seen under pressure from poor fundamentals.
According to the market sentiment analyzer Bitcoin Fear and Greed Index, the indicator is also slowly approaching the "Extreme Fear" mark, which indicates the emergence of a panic mode in the market.
Source: https://coingape.com/breaking-ecb-and-bank-of-england-lift-interest-rates-crypto-market-reacts/
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