Connect with us

Regulation

European Central Bank Braces For Two More Rate Cuts, Is US Fed Next?

Published

on


The European Central Bank (ECB) is preparing for two more rate cuts, as revealed by ECB policymaker Yannis Stournaras. Hence, netizens are speculating whether the U.S. Federal Reserve would mirror a similar move in September. As of the latest update, the Federal Open Market Committee (FOMC) decided to keep rates steady.

European Central Bank To Cut Interest Rates

The ECB rate cut prediction, shared in an interview with the German financial newsletter Platow Brief, reflects the central bank’s concerns over a weakening euro zone economy. This could potentially drag inflation below its 2% target.

Stournaras serves as the head of the Bank of Greece and is considered one of the more dovish members of the ECB’s Governing Council. He highlighted the lower-than-expected economic growth and its implications for inflation. “The renewed signs of weak economic activity and the high level of uncertainty will very likely dampen inflation more than had been expected,” he stated, according to a Bloomberg report.

The statement suggests a significant risk of inflation falling below the ECB’s target in the medium term. Despite a slight uptick in euro zone inflation for July and growth for the second quarter, traders anticipate that the ECB will resume lowering borrowing costs by September or October.

Furthermore, this outlook is reinforced by ongoing surveys pointing to a deceleration in economic activity. Stournaras supported this expectation. However, he noted that forthcoming data, particularly on wages, and the ECB’s new economic projections, will be critical in shaping future decisions.

“I still expect two rate cuts this year if disinflation continues as expected,” he remarked. This underscores the delicate balance the ECB must maintain. Earlier, European Central Bank cut interest rates by 25 basis points on July 6, 2024.

US Fed To Mirror Move?

The ECB’s approach contrasts with recent developments at the US Federal Reserve. The Fed has opted to maintain its key interest rate within the range of 5.25% to 5.5%. This decision was driven by their urge to meet the 2% inflation target. U.S. Fed Chair Jerome Powell has indicated that a rate cut in September remains a possibility amid favorable inflation data.

“We never use our tools to support or oppose a political party, a politician, or any political outcome,” Powell emphasized. Meanwhile, recent U.S. job data presents a mixed picture of the economic arena. According to the data released on August 1, Initial jobless claims rose by 14,000 to 249,000 for the week ending July 27.

Whilst, continuing claims increased by 33,000 to 1,877,000 for the week ending July 20. These figures suggest a cooling labor market, which could influence the U.S. Fed’s decision-making process. If the job market continues to show signs of weakness, it might boost the case for a rate cut in the near term.

Meanwhile, across the Atlantic, the Bank of England recently cut interest rates by 25 basis points, moving them from 5.25% to 5.0%. This decision followed a narrow vote margin of 5:4. It marks the first such interest rate cut since the COVID-19 pandemic began in 2020.

Bank of England Governor Andrew Bailey cited eased inflationary pressures as the rationale for the rate cut. “Inflationary pressures have eased enough that we’ve been able to cut interest rates today,” he noted. However, Bailey also stressed the need for caution in further rate reductions to maintain low and stable inflation.

Potential Impact On Bitcoin, Gold & Stocks

The potential for rate cuts by major central banks carries significant implications for various markets. In the crypto sector, the prospect of increased liquidity is seen as a positive development. Bitcoin, which currently trades around $64,700, saw a slight decrease of 2% but remains sensitive to changes in monetary policy.

Lower interest rates can enhance the appeal of cryptocurrencies as alternative investments, driving more capital into the domain. Also, the latest US job data could further impact the crypto market. For context, weakening labor market might prompt the Fed to lower rates. It potentially leads to increased liquidity and investment in riskier assets, including the cryptocurrency market.

Investors often view digital currencies as a hedge against traditional financial instability, and increased liquidity could encourage this sentiment. Gold, traditionally viewed as a hedge against inflation, could also experience increased demand if central banks proceed with rate cuts.

Reduced interest rates typically lower the opportunity cost of holding non-yielding assets like gold. This makes such assets more attractive to investors seeking stability in uncertain economic times. However, the stock market’s response to anticipated rate cuts may be mixed.

Reduced borrowing costs can boost corporate profits and investor sentiment toward the stock market. However, the reasons for the rate cuts, such as weak economic growth and uncertainty, may negatively impact market enthusiasm.

✓ Share:

Kritika Mehta

Kritika boasts over 2 years of experience in the financial news sector. Currently working as a crypto journalist at Coingape, she has consistently shown a knack for blockchain technology and cryptocurrencies. Kritika combines insightful analysis with a deep understanding of market trends. With a keen interest in technical analysis, she brings a nuanced perspective to her reporting, exploring the intersection of finance, technology, and emerging trends in the crypto space.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





Source link

Regulation

US SEC Drops Charges Against Hawk Tuah Girl Hailey Welch

Published

on


Hawk Tuah girl Hailey Welch, known for her association with the controversial $HAWK token, has been cleared of any wrongdoing after a lengthy investigation by the U.S. Securities and Exchange Commission (SEC). The SEC has decided not to press charges against Welch in connection with the rapid rise and subsequent collapse of the meme-based cryptocurrency.

US SEC Investigation Into Hawk Tuah Girl Concludes Without Charges

The SEC had launched an investigation into the $HAWK token after its dramatic price drop. The token, which was linked to Welch’s viral persona, initially saw a market cap surge to $490 million before crashing by over 90%. Investors who were impacted by the crash filed a lawsuit against those behind the project, alleging that the coin had been promoted and sold without proper registration.

Hawk Tuah girl Hailey Welch, who cooperated fully with the investigation, expressed relief after the SEC’s decision. “For the past few months, I’ve been cooperating with all the authorities and attorneys, and finally, that work is complete,” Welch told TMZ.

Her attorney, James Sallah, confirmed that the SEC had closed the case without any findings against her, adding that there would be no monetary sanctions or restrictions on Welch’s future involvement in cryptocurrency or securities.

This Is A Developing News, Please Check Back For More

✓ Share:

Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





Source link

Continue Reading

Regulation

Sonic Labs To Abandon Plans For Algorithmic USD Stablecoin, Here’s Why

Published

on


Barely a week after hinting at launching an algorithmic USD stablecoin, Sonic Labs is shuttering its plans. Sonic Labs co-founder Andre Cronje revealed that incoming stablecoin regulation in the US contributes to the change of stance.

Sonic Labs Makes U-Turn Over Algorithmic USD Stablecoin

In mid-March, Sonic Labs disclosed plans for a yield-generating algorithmic stablecoin for its blockchain. However, new developments in the US regulatory landscape are forcing the company to ditch its algorithmic stablecoin ambitions.

Sonic Labs co-founder Andre Cronje confirmed the change in direction via an X post following the release of the full draft of the STABLE Act by Congress for clearer oversight. According to the text, lawmakers are pushing for a two-year moratorium on algorithmic stablecoin, souring Sonic Labs plans.

Unlike mainstream stablecoins backed by fiat or other commodities, algorithmic stablecoins rely on smart contracts to maintain their peg. The 2022 implosion of Terra’s ecosystem following the de-pegging of its TerraUSD (UST) algorithmic stablecoin stunned regulators.

“We will no longer be releasing a USD-based algorithmic stablecoin,” said Cronje.

In a light-hearted note, community members teased potential strategies for Sonic Labs to sidestep incoming stablecoin regulation. Apart from the loophole of launching the algorithmic stablecoin before the regulation goes live, Cronje teased an algorithmic dirham that will be denominated in USD.

Industry Players Are Bracing For New Stablecoin Regulations

Stablecoin issuers are steeling themselves for incoming stablecoin regulations in the US. While the GENIUS Act and STABLE Act continue to inch forward, there are common denominators in both bills.

For starters, there is the requirement for equivalent reserves at a 1:1 ratio with both bills steering clear of algorithmic stablecoins. The White House is favoring the GENIUS Act over the STABLE Act as lobbyists rally to stifle the possibility of a Conference Committee.

Authorities are targeting stablecoin regulation to reach Trump in two months as issuers jostle for position. Tether, Circle, and Ripple are staking their claims to lead the US government’s ambitions to rely on stablecoins to maintain the dollar’s dominance.

✓ Share:

Aliyu Pokima

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





Source link

Continue Reading

Regulation

FDIC Revises Crypto Guidelines Allowing Banks To Enter Digital Assets

Published

on


The Federal Deposit Insurance Corporation (FDIC) has updated its guidelines, enabling banks to engage in cryptocurrency-related activities without seeking prior approval. This new policy shift signals a change in the FDIC’s approach to the growing role of digital assets in the banking sector.

New FDIC Guidelines on Crypto-Related Activities

The FDIC has issued a new Financial Institution Letter (FIL-7-2025), which provides updated guidance for banks looking to engage in cryptocurrency activities. The new guidance rescinds the previous policy set out in FIL-16-2022, which required banks to notify the FDIC before engaging in such activities.

Under the new rules, banks can now participate in permissible crypto-related activities without waiting for FDIC approval, as long as they manage the risks appropriately.

This change is seen as a shift in the FDIC’s stance, following the agency’s earlier stance that required prior approval for crypto engagements. FDIC Acting Chairman Travis Hill expressed that this new approach aims to establish a more consistent framework for banks to explore and adopt emerging technologies like crypto-assets and blockchain.

“With today’s action, the FDIC is turning the page on the flawed approach of the past three years,” said Hill in a statement.

This Is A Developing News, Please Check Back For More

✓ Share:

Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





Source link

Continue Reading

Trending

Copyright © 2024 coin2049.io