Reserve Dollar

Core

Bank

Arthur

Reserve

The Eurozone’s inflation just hit a new low. The latest numbers show a drop to 2.2% in August, a three-year low. That’s down from 2.6% in July, and it’s exactly what economists were predicting, but the decline is still grabbing attention.&nbsp; 
This dip might be pushing the European Central Bank (ECB) toward slashing rates in September. Core inflation, which leaves out volatile stuff like energy and food, also slipped to 2.8% from 2.9% in July. Again, right on target with what the experts predicted. 
<img loading="lazy" decoding="async" class="alignnone wp-image-581355 size-full" src="https://www.cryptopolitan.com/wp-content/uploads/2024/08/Screenshot-2024-08-30-at-11.21.14.png" alt="Eurozone inflation eases to 2.2% – More ECB rate cuts ahead?" width="1685" height="1123" srcset="https://www.cryptopolitan.com/wp-content/uploads/2024/08/Screenshot-2024-08-30-at-11.21.14.png 1685w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Screenshot-2024-08-30-at-11.21.14-300x200.png 300w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Screenshot-2024-08-30-at-11.21.14-1200x800.png 1200w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Screenshot-2024-08-30-at-11.21.14-768x512.png 768w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Screenshot-2024-08-30-at-11.21.14-1536x1024.png 1536w" sizes="(max-width: 1685px) 100vw, 1685px"> 
However, the Euro isn’t having a great day. After these numbers came out, the currency dropped 0.1% against the British pound, trading at 0.8408. Against the US dollar, it ticked up a tiny bit, just 0.04%, landing at $1.1083.&nbsp; 
Traders are looking ahead to rate cuts from the Federal Reserve as well. Philip Lane, the ECB’s chief economist, has been hinting that more rate cuts are probably on the way.&nbsp; 
He explained that holding interest rates too high for too long could mean inflation stays stuck below target for a while, adding it’s still uncertain if <a href="https://ec.europa.eu/eurostat/web/products-euro-indicators/w/2-30082024-ap" rel="nofollow noopener" target="_blank">inflation</a> will actually hit the ECB’s 2% goal anytime soon. 
On the same page but a bit more cautious is Isabel Schnabel from the ECB’s executive board. She said she’s open to rate cuts too, but thinks the bank should “proceed gradually and cautiously.” 
So, there’s a bit of a split in how fast and how far the ECB should go with cutting rates.&nbsp; 
<figure id="attachment_570189" aria-describedby="caption-attachment-570189" style="width: 100%" class="wp-caption aligncenter">
 <img loading="lazy" decoding="async" class="wp-image-570189 " src="https://www.cryptopolitan.com/wp-content/uploads/2024/08/Federal-Reserve-about-to-have-its-toughest-week-yet.webp" alt="Eurozone inflation eases to 2.2% – More ECB rate cuts ahead?" width="641" height="427" srcset="https://www.cryptopolitan.com/wp-content/uploads/2024/08/Federal-Reserve-about-to-have-its-toughest-week-yet.webp 1920w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Federal-Reserve-about-to-have-its-toughest-week-yet-300x200.webp 300w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Federal-Reserve-about-to-have-its-toughest-week-yet-1200x800.webp 1200w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Federal-Reserve-about-to-have-its-toughest-week-yet-768x512.webp 768w, https://www.cryptopolitan.com/wp-content/uploads/2024/08/Federal-Reserve-about-to-have-its-toughest-week-yet-1536x1024.webp 1536w" sizes="(max-width: 641px) 100vw, 641px">
 <figcaption id="caption-attachment-570189" class="wp-caption-text">
 Jerome Powell, Chairman of the Federal Reserve
 </figcaption>
</figure> 
If both the ECB and the Fed decide to cut rates in September, it could set off some big moves in the crypto market. Lower rates usually mean cheaper borrowing and more money floating around, which could drive more people to invest in riskier assets like Bitcoin. 
Market forecasts suggest a 65% chance of a 0.25% cut and a 35% chance for a half-point cut. Meanwhile, the ECB has about an 80% probability of trimming rates by 25 basis points.&nbsp; 
This could create a friendly environment for cryptocurrencies because they thrive on a bit of market chaos. Lower borrowing costs can mean more cash flowing into the market, driving up demand for high-risk, high-reward investments. 
Not everyone is convinced a rate cut is that magic bullet. Arthur Hayes, the guy who founded BitMEX, has some reservations. He thinks that rate cuts might not be enough if other currencies, like the yen, start getting stronger.&nbsp; 
<figure id="attachment_551989" aria-describedby="caption-attachment-551989" style="width: 100%" class="wp-caption aligncenter">
 <img loading="lazy" decoding="async" class="wp-image-551989 " src="https://www.cryptopolitan.com/wp-content/uploads/2024/07/bitmex-arthur-hayes.webp" alt="Eurozone + ECB + Fed + Bitcoin" width="660" height="440" srcset="https://www.cryptopolitan.com/wp-content/uploads/2024/07/bitmex-arthur-hayes.webp 1200w, https://www.cryptopolitan.com/wp-content/uploads/2024/07/bitmex-arthur-hayes-300x200.webp 300w, https://www.cryptopolitan.com/wp-content/uploads/2024/07/bitmex-arthur-hayes-768x512.webp 768w" sizes="(max-width: 660px) 100vw, 660px">
 <figcaption id="caption-attachment-551989" class="wp-caption-text">
 Arthur Hayes
 </figcaption>
</figure> 
That could lead to the unwinding of carry trades, which would hit risk assets hard, including Bitcoin. 
There’s also the broader market sentiment to consider. Even if the Fed and ECB cut rates, other macroeconomic factors could play a big role in determining Bitcoin’s fate.&nbsp; 
For instance, if there’s a downturn or a financial crisis, rate cuts might not help as much as people hope. External factors, such as trade wars, geopolitical tensions, or even unexpected financial shocks, could—as they say—ruin the tour.

Eurozone inflation eases to 2.2% – More ECB rate cuts ahead?

Cryptopolitan_News

Other articles published on Aug 30, 2024

This Trader Makes a Bold XRP Price Prediction – Will Rippe’s Token Hit $27?

CRYPTO BREAKING NEWS: Russia Adopts Cryptocurrency Payments In International Trade

Argentina’s Buenos Aires to Launch Ethereum Curriculum for High School Students

Bitcoin Faces Selling Pressure from U.S.

AI Cloud Services: A New Revenue Stream for IREN

Hamster Kombat: Major Listings Ahead September Airdrop

Join our free newsletter for daily crypto updates!