The European Central Bank (ECB) raised its key interest rates by 25 bps during its meeting on May 4, indicating a slowing pace of policy tightening. The inflation rate in the Euro Area reached 7% in April, with the core rate remaining near an all-time high at 5.6%.
The crypto market reacted positively to the ECB rate hike on expected terms after the U.S. Fed too raised rates by 25bps. Bitcoin price remains over $29,000, while Ethereum price jumps over $1900. Traders will likely open positions for bullish prices after central banks hint at no aggressive rate hikes.
ECB Hikes Rates By 25 Bps
The European Central Bank Governing Council decided to increase the interest rate on the main refinancing operations, the interest rates on the marginal lending facility, and the deposit facility to 3.75%, 4.00%, and 3.25% respectively.
The ECB aims to bring policy rates near the 2% target amid high levels of inflation. The central bank will look to maintain low levels for as long as necessary. Further, the Governing Council will keep reducing the Eurosystem’s asset purchase program (APP) portfolio at a measured pace, discontinuing reinvestments under the APP as of July 2023.
Stock market indexes fell to red after the ECB raised interest rates, with Euro falling slightly against the US dollar. The DXY index jumped sharply from 101.1 to 101.57, indicating slight pressure on the crypto market. However, the overall outlook remains bullish, with Bitcoin price looking to cross $30,000.
ECB President Christine Lagarde said the central bank will continue to work on bringing inflation lower. It will continue to follow a data-dependent approach to determining the appropriate level and duration of the restriction.
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Bitcoin and Ethereum Jumps
BTC price jumps after the ECB rate hike decision. The price is currently trading at $29,093, up over 3% in the last 24 hours. Traders and investors are looking for upside momentum to push BTC price above $30,000 again as the banking crisis just starting in the US. PacWest Bancorp is believed to be the next bank to collapse.
Ethereum price is trading over $1900, up nearly 3% in the last 24 hours. Other altcoins such as Cardano (ADA) and Solana (SOL) are also showing strength.
Also Read: Non-Crypto PacWest Bank Confirms Sale, Bitcoin Set To Hit $35K
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