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ECB Hikes Interest Rate 75 Basis Points as Inflation Hits

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ECB Hikes Interest Rate 75 Basis Points as Inflation Hits

The European Central Bank (ECB) raised interest rates by 0.75 percentage points Thursday, the biggest single hike since it began setting monetary policy in 1999.

Bitcoin prices were stable on the announcement, which follows a 0.5 percentage point rise announced in July, as Europe faces up to significant inflation and energy shortages in the wake of the pandemic and war in Ukraine.

The announcement takes the interest rate on the main refinancing operations, which provide the bulk of liquidity to the banking system, to 1.25%.

In general, crypto markets are less affected by decisions taken by the ECB and its U.K. counterpart the Bank of England, as it’s the Federal Reserve’s decisions on the U.S. dollar that have a greater impact, analysts have previously told CoinDesk.

Today’s announcement may also have been priced in by markets, after ECB executive board member Isabel Schnabel said in an August speech that she favored “robust” action that could head off greater economic damage later on.

As such, the ECB’s latest move demonstrates that global liquidity tightening is in full swing, which weakens the case for bullish revival in risk assets, including cryptocurrencies. Later this month, the Fed is expected to deliver its third 75 basis point hike – with the U.S. agency’s previous hikes contributing to a slide across the crypto market this year.

Read more: ECB, BOE Have Scant Leeway to Influence Bitcoin


Source: ethereum.today

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