European Central Bank (ECB) is preparing for two more rate cuts to prevent inflation from falling below the 2% target amid the weakening Eurozone economy. ECB’s Greek Central Bank President Yannis Stournaras emphasized the impact of low economic growth on inflation in an interview with Platow Brief and expects two rate cuts by the end of 2024. Stournaras predicts that the ECB will reduce borrowing costs in September or October.
Fed Kept Rates Unchanged
US Federal Reserve (Fed) kept interest rates unchanged at the 5.25% – 5.5% range during the last Federal Open Market Committee (FOMC) meeting on July 31. Fed Chairman Jerome Powell mentioned the possibility of a rate cut in September if inflation data is favorable.
However, the increase in unemployment data released today in the US signals weakening in the labor market. This situation could increase the likelihood of a Fed rate cut.
Meanwhile, the Bank of England (BoE) recently cut interest rates by 25 basis points to 5.0%. BoE Governor Andrew Bailey stated that the reduction in inflationary pressures influenced this decision and emphasized the need for caution in future rate cuts.
Rate Cuts Could Boost Bitcoin, Altcoins, and Gold
Expectations of rate cuts from central banks could have significant effects on assets like Bitcoin (BTC), altcoins, and gold. Bitcoin could benefit from increased liquidity due to potential rate cuts, as investors tend to turn to alternative investments in a low-interest environment. Gold, seen as a hedge against inflation, could also become more attractive with rate cuts.
On the other hand, while rate cuts are generally seen as positive for stock markets, the weak economic growth and uncertainties behind these cuts could lead to mixed reactions in the markets.
