The rate hike is another test for Bitcoin

The price of bitcoin (BTC) and other crypto assets may face some headwinds in the coming months as central banks around the world prepare to say goodbye to the ultra-loose monetary policies caused by the COVID pandemic. 19.

As the first central bank in a Western developed nation to do so since the start of the pandemic, Norway’s central bank, Norges Bank, this week raised its interest rate from 0% to 0.25%, citing the need to “initiate a gradual normalization of the official rate “while the economy” normalizes “.

Norges Bank further justified the rate hike by stating that “the reopening of the company has led to a marked recovery of the Norwegian economy and activity is now above the pre-pandemic level”. He added that the rate “will most likely increase further in December”. And while the rate hike in Norway may be insignificant in itself, central banks tend to follow each other when it comes to interest rate policies, as pointed out by Nik Bhatia, bitcoin advocate and author of the book Layered Money:

Also, setting the stage for tighter monetary policies, the Bank of England (BoE) warned Thursday that “global inflationary pressures remained strong” by keeping rates unchanged. He also noted that “cost pressures may prove to be more persistent” than previously believed.

The Fed is keeping rates unchanged for now

Similarly, the US Federal Reserve (the Fed) also decided to keep rates unchanged this week, although it noted in its statement that “inflation is high” and that it “is on track to moderately exceed 2%. for some time”.

2% is the long-term inflation target set by the Federal Reserve.

In comments to reporters, Fed Chairman Jerome Powell said tapering – which means a withdrawal of the central bank’s $ 120 billion in monthly bond purchases to support financial markets – could begin as early as the next Fed meeting at early November, provided the labor market remains “reasonably strong”.

With a rising inflation rate and a tighter labor market, some analysts say the market now seems almost relieved that the Fed is moving towards tapering and rate hikes.

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