Breaking: Bank of England Cuts Interest Rate First Time in 4-Years, Bitcoin Recovery Soon?
In a breakthrough development, the Bank of England has decided to cut interest rates by 25 basis points moving it from 5.25% previously to now at 5.0%. The decision comes on the expected lines while reports suggest that the British central bank has managed this pivot with a narrow vote margin. This is a positive development for Bitcoin and the entire crypto industry as it sets the ball rolling for further liquidity easing, and the Fed to follow with a similar decision next month in September.
Bank of England Pivots, Fed Next?
This is the first time in four years, since the onset of the COVID-19 pandemic in 2020, that the Bank of England has chosen to pivot from its monetary tightening policy amid soaring inflation. BoE Governor Andrew Bailey also voted in favor of the rate cut stating: “inflationary pressures have eased enough that we’ve been able to cut interest rates today”.
However, he said that the British central bank would be careful not to cut the interest rates too quickly in the near future. “But we need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much. Ensuring low and stable inflation is the best thing we can do to support economic growth and the prosperity of the country,” he added.
A day before, the US Federal Reserve decided to keep interest rates unchanged at 5.25%. However, Powell’s commentary after the FOMC meeting noted the possibility of a rate cut coming in September next month.
Earlier this week, the Bank of Japan announced a rate hike amid the collapsing Japanese Yen. On the other hand, central banks of other economies like Canada have already pivoted with rate cuts earlier this year.
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Bitcoin and Crypto Reaction
The BTC price has shown a minor recovery of 1000 points from its day’s low of $63,500. As of press time, BTC is trading $64,462.47 with daily trading volumes jumping by 28%.
Soon after the Fed meeting yesterday, the Bitcoin liquidations surged as the BTC price tanked in a sell-the-news event. Furthermore, the Bitcoin volatility has increased with options expiry on Friday.
Interest rate cuts flush more liquidity in the market and the altcoins would benefit the most from this as per historical trends. Altcoin whales have already started preparations in this direction beforehand while buying the current dips.
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