ECB Leaves Rates On Hold, Bitcoin Surges More Than 5%

ECB Leaves Rates On Hold, Bitcoin Surges More Than 5%.

The European Central Bank left interest rates unchanged despite record inflation.

The central bank’s policy rate remains at 0%, the top lending rate at 0.25% and the base deposit rate at -0.5%.

The move comes at a time when the ECB is under increased pressure. Inflation has been rising month-on-month in the 19-member region, with the latest figure hitting a record 5.1% in January.

While the bank says higher inflation will ease over the course of the year, many economists are wondering if consumer prices will remain high in the near term. Higher and longer-lasting inflation could pose risks to the ongoing economic recovery.

ECB President Christine Lagarde said on Thursday:

“Inflation is likely to rise further than previously expected but should ease this year.”

She added that the recent increase was mainly due to higher food and energy costs.

The central bank will update its growth and inflation forecasts next month in time for its next monetary policy meeting.

Meanwhile, the US Federal Reserve (Fed) has repeatedly “threatened” interest rates in recent months after inflation hit a 40-year high of 7% in December.

Although the Fed has not hiked rates for a while, it is sticking to its plan to hike rates in March. The agency also signaled a decline in its total assets, another act of tight monetary policy. This move not only brought down cryptocurrencies, but also gold and stocks.

The ECB, keeping interest rates unchanged, has allowed Bitcoin to rally more than 5.3% from intraday lows of $36,375 to highs of $38,216 before retreating to the current level of $37,890.

Source: TradingView

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