The Swiss National Bank cuts rates, Bitcoin in ambush


7:00 p.m. ▪ 4 min reading ▪ by Fenelon L.

In an uncertain economic context, the Swiss National Bank (SNB) surprises by lowering its key rates, while the American Federal Reserve (Fed) stays the course, while hinting at future relaxations. Could Bitcoin do well in this contrasting economic climate?

Bitcoin sits between the SNB and the Fed

The Swiss National Bank lowers its key rates

The unexpected decision of the Swiss National Bank (SNB) to reduce its key rate to 1.50% constitutes a turning point in global monetary policy. The first major central bank to relax its policy, the SNB justifies this choice by the control of inflation in Switzerland, which has remained below 2% for several months.

This drop in rates, welcomed by Swiss industry put to the test by a strong franc, could herald a broader movement. Analysts estimate that the European Central Bank (ECB) could follow suit as early as June. The SNB thus seems to have anticipated a trend, at the same time sending a strong signal to the markets.

However, not all central banks follow the same path. This Tuesday, March 19, the Bank of Japan ended eight years of negative rates by raising interest rates for the first time in 17 years. At the same time, the central banks of Taiwan and Turkey surprised observers by raising rates amid fears of soaring inflation. These divergences highlight the complexity of the global economic situation.

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The Fed stays the course, Bitcoin in ambush!

Contrary to the expectations of some analysts, the Fed chose to maintain its rates in a range of 5.25% to 5.50%, a level not seen since 2001. However, it confirmed its anticipation of three rate cuts in 2024, subject to a stabilization of inflation around the 2% objective. Although higher than expected at the start of the year, US inflation is showing encouraging signs, as evidenced by the core personal consumption expenditures index.

Jerome Powell, Chairman of the Fed, nevertheless insists on the need for reinforced confidence in the economy before any change of course. The institution remains vigilant in the face of inflation, with the objective of stabilization at 2%. The forecasts for 2025, slightly less optimistic, reflect this caution.

Despite this wait-and-see position, investors, particularly in the cryptocurrency sector, are hoping for a rate cut from June. Bitcoin, often seen as a safe haven in the face of economic uncertainties, could benefit from monetary easing.

In a contrasting global economic context, the decisions of central banks are scrutinized. If the SNB has opened the way to a rate cut, the Fed is staying the course for the moment. The evolution of inflation and confidence in the economy will be the key factors in future monetary adjustments.

Bitcoin, for its part, stands ready to seize the opportunities that a more accommodating monetary policy would offer. The future will tell us whether the queen of cryptos will be able to assert itself as a credible alternative in the face of economic turbulence.

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Fenelon L. avatarFenelon L. avatar
Fenelon L.

Passionate about Bitcoin, I like to explore the intricacies of blockchain and cryptos and I share my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I firmly believe that Bitcoin is the tool that can make this possible.

DISCLAIMER

The comments and opinions expressed in this article are those of the author alone, and should not be considered investment advice. Do your own research before making any investment decisions.

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