tl;dr
The European Central Bank (ECB) has cut key interest rates to 2%, the lowest level since early 2023, marking its eighth rate cut amid slowing inflation in the Eurozone. This contrasts with the US Federal Reserve, which lowered rates twice in late 2024 but has since held them steady. The widening rat...
The European Central Bank (ECB) has lowered its key interest rates to 2%, marking the lowest level in two years and representing its eighth rate cut amid easing inflation across the Eurozone. This contrasts sharply with the US Federal Reserve, which, after two rate cuts in late 2024, has maintained steady rates since then.
The widening divergence in monetary policy between the ECB and the Federal Reserve has drawn strong reactions. US President Donald Trump publicly urged Fed Chair Jerome Powell to reduce US interest rates to prevent a looming macroeconomic crisis.
Bitcoin’s price responded instantly to the ECB's announcement, surging by $1,000 from $104,500 to $105,500. This immediate move underscores how closely cryptocurrency markets watch central bank policies and their effects on liquidity and investor sentiment.
The ECB’s decision to cut rates amidst slowing inflation aims to support economic growth in the Eurozone, despite external pressures such as potential US tariffs. Meanwhile, the US Fed’s steadiness highlights a different approach, with concerns over inflation and economic stability guiding their decisions.
This interest rate gap has become a key talking point, suggesting that central banks' differing strategies could influence capital flows, currency valuations, and investor behavior globally. The swift reaction of Bitcoin further exemplifies how digital assets are increasingly intertwined with traditional financial policies.