ECB Hikes Interest Rate 75 Basis Points as Inflation Hits

Crypto markets reacted calmly to the mammoth rise, but it may presage further aggressive action by central banks

AccessTimeIconSep 8, 2022 at 12:15 p.m. UTC
Updated May 11, 2023 at 3:43 p.m. UTC
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The European Central Bank (ECB) raised interest rates by 0.75 percentage points Thursday, the biggest single hike since it began setting monetary policy in 1999.

Bitcoin (BTC) prices were stable on the announcement, which follows a 0.5 percentage point rise announced in July as Europe faces up to significant inflation and energy shortages in the wake of the COVID-19 pandemic and the war in Ukraine.

The decision takes the interest rate on the main refinancing operations, which provide the bulk of liquidity to the banking system, to 1.25%.

In general, crypto markets are less affected by decisions taken by the ECB and its U.K. counterpart, the Bank of England, because it’s the Federal Reserve’s decisions on the U.S. dollar that have a greater impact, analysts have previously told CoinDesk.

The announcement may also have been priced-in by markets after ECB executive board member Isabel Schnabel said in an August speech that she favored “robust” action that could head off greater economic damage later on.

As such, the ECB's latest move demonstrates that global liquidity tightening is in full swing, which weakens the case for bullish revival in risk assets, including cryptocurrencies. Later this month, the Fed is expected to deliver its third 75 basis point hike – with the U.S. agency’s previous hikes contributing to a slide across the crypto market this year.


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Jack Schickler

Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

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