Important week ahead for crypto
This week it is up to both the Federal Reserve and the European Central Bank to take a new interest rate decision. Interest rate hikes by the Federal Reserve in particular have hit the market this year. Interestingly, it looks like they may be slowing down for the first time at the December 14 interest rate meeting.
The Federal Reserve raised interest rates by 0.75 percent each time in recent meetings and the market now expects a 0.50 percent hike. An interest rate hike of 0.50 percent seems a certainty. More interesting is the press conference of Fed Chairman Jerome Powell shortly after the interest rate decision.
In it, this powerful central banker will probably talk more about how the Federal Reserve is looking at the economy right now. Based on that, we can paint a better picture of the months ahead. If Powell comes up with clarity, then we will know approximately where interest rates will peak in 2023.
European Central Bank as well
A day later, it is our own European Central Bank’s turn to make an interest rate decision. Although the ECB has been less aggressive this year than its US counterparts at the Federal Reserve, it also seems to be slowing down on 15 December. The ECB is also likely to raise interest rates by 0.50 percent, instead of the 0.75 percent we saw at the previous meeting.
In that respect, it seems that the central banks also realize that they cannot raise interest rates enormously without consequences. For years, the economy has operated at practically zero interest rates and, in the case of the ECB, even with negative interest rates. You can’t expect to be able to aggressively raise interest rates without shaking the economy.
They are now slowly getting inflation under control, but the question is, of course, what price they have to pay for it. If economic problems arise, for example in the form of a recession, the money printers may have to get back to work very quickly. That seems like a favorable scenario for Bitcoin, at least in the long run.