Key Points:
- Bank of Canada (BoC) said on Wednesday morning that it would at least temporarily suspend any future interest rate hikes after increasing its benchmark overnight rate by 25 basis points to 4.5%.
- Bitcoin (BTC), which was down for the day and experienced a general sell-off in risky assets, didn’t respond much to the BoC’s dovish announcement.
Unexpectedly, the Bank of Canada (BoC) said on Wednesday morning that it would at least temporarily suspend any future interest rate hikes after increasing its benchmark overnight rate by 25 basis points to 4.5%.
“Inflation is projected to come down significantly this year,” said the Bank Of Canada in its policy statement. “If economic developments evolve broadly in line with the [bank’s] outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases.”
Bitcoin (BTC), which was down for the day and experienced a general sell-off in risky assets, didn’t respond much to the BoC’s dovish announcement, but this might be a bullish move. The Bank Of Canada began a series of aggressive rate hikes in 2022, similar to the U.S. Federal Reserve, in an effort to slow down rapidly rising inflation.
The terrible bear market for bitcoin last year, which saw the price plummet from just shy of $50,000 to roughly $15,000 before closing 2022 around $16,500, was significantly influenced by this dramatically tighter monetary policy by the Fed, BoC, and other western central banks.
Similar to the BoC, the Federal Open Market Committee (FOMC) of the Fed meets the next week and is anticipated to raise interest rates by only 25 basis points (versus 50 basis points at the previous meeting and 75 prior to that). If the FOMC pleasantly revealed that it also intended to suspend its rate hiking program, the crypto markets would be far less inclined to ignore that information.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.
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