Bank of Canada Begins G-7 Monetary Easing Cycle, Trimming Benchmark Rate 25 Basis Points

As a crypto investor, I had expected this move based on the signals from Canadian policymakers. They had expressed satisfaction with the current inflation trend while also voicing concerns over the potential for an economic slowdown.

If inflation persists in its downward trend, it’s likely that the Bank of Canada will reduce its key interest rate again, according to Governor Tiff Macklem in his prepared statement post-decision.

As a researcher, I would phrase it this way: The Bank of Canada (BoC) has taken the lead among G-7 central banks by initiating an anticipated easing cycle in monetary policy today, following years of efforts to curb inflation. Economists predict that the European Central Bank (ECB) will be the second major bank to follow suit at its meeting tomorrow.

Some Federal Reserve members have proposed that the central bank might postpone any interest rate reductions until 2024 is over. However, recent economic indicators suggest a deceleration in both economic expansion and inflation. Based on current market predictions, there’s approximately a 60% likelihood of a rate reduction occurring before or during the Fed’s September meeting, as indicated by CME FedWatch.

As a crypto investor, I can tell you that when central banks implement tighter monetary policies, it usually creates headwinds for risk assets like Bitcoin. This is because higher interest rates make it more appealing for investors to put their money in fixed income securities rather than riskier assets such as cryptocurrencies. However, with the current trend of lower interest rates in Western economies, Bitcoin bulls may be looking forward to reaching new heights and surpassing its previous all-time high from March 2021, which was around $73,500.