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The Bank of England lowered the interest rates from 5.25% to 5% earlier today in the first cut since the start of the Covid-19 pandemic in March 2020.
Consequently, the UK’s central bank has followed the example set by the ECB and the Bank of Canada earlier this summer, prompting questions about the Federal Reserve’s next move.Ever since the pandemic broke out in March 2020 and the subsequent effects that were felt in the following years, most global central banks undertook severe actions to try to fight the galloping inflation by raising the interest rates to multi-year highs.
The Bank of England was at the forefront as it hiked the rates to 5.25% within the next few years. Whether or not those actions were actually successful in fighting inflation, especially in the UK, remains questionable, but the central bank decided to pivot from its strategy earlier today.by the BBC, the rates were lowered to 5% in the first cut since March 2020. According to BoE’s governor, Andrew Bailey, the decision was based on the fact that “inflationary pressures have eased enough.
Interest rates typically have a direct effect on the cryptocurrency market. In general, lower rates mean that money is cheaper to borrow and could be allocated into more risk-on assets like Bitcoin and vice-versa. As such, a potential rate cut by the world’s largest economy could have a massive impact on the crypto market.
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