In a significant move, the European Central Bank (ECB) has announced a 25 basis points increase in the three key ECB interest rates, impacting the price of Bitcoin and the broader financial landscape.
In a noteworthy development, the European Central Bank (ECB) announced its decision to raise the three key ECB interest rates by 25 basis points. The Governing Council’s move will result in an increase to 4.00% for the interest rate on the main refinancing operations, 4.25% for the interest rate on the marginal lending facility, and 3.50% for the interest rate on the deposit facility. These adjusted rates are scheduled to take effect starting from June 21, 2023. This decision follows a recent downturn in the cryptocurrency market, triggered by hints from the US Federal Reserve regarding potential rate hikes later this year.
The European Central Bank (ECB) justified its decision to raise interest rates by expressing concerns about the potential persistence of high inflation, despite recent signs of decline. In response to the ECB’s rate hike announcement, Bitcoin price witnessed an increase on Thursday, even amidst a 4.19% decrease over the last 24 hours. This move by the ECB mirrors a similar decision taken during its May 2023 meeting, which resulted in a positive reaction from the cryptocurrency market.
Also Read: ECB rate hike boosts Bitcoin and ETH prices
ECB Highlights Persistent Inflation Pressures
The ECB Governing Council provided a projection of a decline in the inflation rate for the upcoming two years. In a statement, the Council stated that based on the June macroeconomic projections, the Eurosystem staff anticipates average headline inflation to be 5.4% in 2023, 3.0% in 2024, and 2.2% in 2025. While indicators of underlying price pressures continue to show strength, there are some initial indications of a possible softening.
Moving ahead, the ECB has expressed its intention to adopt a “sufficiently restrictive” stance in its efforts to achieve the medium-term target of bringing inflation down to 2%. The ECB aims to implement necessary measures to ensure an appropriate level of restriction that supports its goal of maintaining price stability within the desired range.
Also Read: European Central Bank Chief Indicates Plans for Interest Rate Increases
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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