Bitcoin and Ethereum prices surged after the European Central Bank (ECB) increased interest rates, as expected
The European Central Bank (ECB) has increased its key interest rates by 25 bps, indicating a slower tightening of policies. The crypto market reacted positively to this news as Bitcoin and Ethereum prices increased. The inflation rate in the Euro Area reached 7% in April, with the core rate remaining near an all-time high at 5.6%. Traders are expected to take bullish positions as central banks suggest no aggressive rate hikes.
The European Central Bank Governing Council decided to increase the interest rates on various operations including main refinancing, marginal lending, and deposit facilities. The new rates are 3.75%, 4.00%, and 3.25% respectively.
The ECB wants to reach a 2% target for policy rates, even though inflation is high. They plan to keep low levels of inflation for as long as necessary. The bank will also gradually decrease the Eurosystem’s asset purchase program (APP) portfolio and will stop reinvestments under the APP from July 2023.
After the European Central Bank (ECB) raised interest rates, the stock market indexes fell, and the Euro slightly declined against the US dollar. As a result, the DXY index rose sharply, indicating slight pressure on the crypto market. Nevertheless, the outlook for Bitcoin remains optimistic, with its price aiming to exceed $30,000.
The ECB President, Christine Lagarde, mentioned that the central bank will keep working on lowering inflation by looking at the relevant data. They will consider the suitable level and duration of the restrictions based on that.