The European Central Bank (ECB) has cut its deposit rate by a quarter point for the second time this year, in response to weak economic growth and inflation edging towards the 2% target.
Rate Cut and Market Reaction
The ECB's decision to reduce the deposit rate was widely expected, but financial markets reacted minimally. The 2024 growth forecast was adjusted to 0.8%, slightly below the previous forecast of 0.9%. Domestic demand is projected to drag down growth in upcoming quarters.
Economists' Forecasts and Opinions
The ECB's Governing Council reiterated its stance of making decisions based on data and on a meeting-by-meeting basis. Economists are split, with some predicting a pause in rate cuts in October. ECB President Christine Lagarde emphasized that there are no pre-commitments for future actions.
Cryptocurrency Market Reaction
Following the ECB's announcement, the euro saw a modest increase against the U.S. dollar. Meanwhile, the cryptocurrency market also surged. Bitcoin rose by 2.5% to $58,258, and Ether inched up by 1% to $2,370. The overall cryptocurrency market cap reached approximately $2.05 trillion.
The ECB's deposit rate cut has elicited mixed reactions in both financial and cryptocurrency markets. Developments in the coming months will depend on further central bank decisions and economic indicators.
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