Global Central Banks Fight Inflation: How Will It Affect Crypto?

inflation rate and crypto
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The rate of inflation is now gaining international attention. The political system simply cannot conceal it any longer. It is annihilating cryptos.

The inflation rate, which has been significantly understated in recent years, is gaining international attention.

The political system simply cannot conceal it any longer.

Central banks have struggled to prevent inflation, owing primarily to their position as the lap dogs of the entrenched financial system.

As a result, a series of false and misleading policies were implemented, resulting in a negative impact on bank reputation and long-term damage to global markets.

The RBA Now Wants a Throw

Following the FED’s announcement of a 0.75 percent interest rate increase last Wednesday, the Reserve Bank of Australia (RBA) may be considering a rapid increase in interest rates. It is the largest interest rate increase since 2000 to (attempt to) cool soaring US inflation.
The Fed fired the first shot, and central banks began to chase it down before things got out of hand.

Earlier in June, the RBA surprised investors by raising interest rates by twice the amount predicted by analysts – a 50-basis-point increase. As a result, the Bank stated that it would do everything in its power to keep inflationary pressures in check.
Markets anticipate that future interest rates will be tied to a FED-sized rate hike, with the RBA raising rates by 75 basis points in July or August.

The RBA is not the only central bank to have intervened. Australia has joined a group of more than 50 central banks in raising interest rates by more than 50 basis points this year.
Christine Lagarde, President of the European Central Bank (ECB), reaffirmed the ECB’s plan to increase interest rates more aggressively in July and September.

Many other central banks around the world, like the RBA and ECB, are struggling to combat higher-than-expected inflation caused by supply chain and energy disruptions caused by the conflict between Russia and Ukraine, as well as an embargo caused by the pandemic in China.

The Economic Destroyer

According to financial analysts, the abrupt increase in interest rates to combat inflation will have no positive impact on economic growth. We are approaching a point where there will be fewer jobs, lower wages, and a general decline in the global economy.

Following the FED meeting, central banks’ decision to raise interest rates has an immediate impact on the cryptocurrency market.

Bitcoin and the other major cryptocurrencies have all seen significant price drops. Crypto traders have been on an emotional roller coaster over the last week as a result of market drops.

Constant bad news has put my nerves to the test. The buildup of pressure resulted in a massive sell-off of highly speculative cryptocurrencies.

Global financial markets expect the US Federal Reserve to raise interest rates more aggressively than previously anticipated in the future. This apprehension has resulted in a sell-off in both the cryptocurrency and stock markets.

Individual investors are not being tested for the first time, but it is the first time in many years that the market has experienced a significant drop as it becomes clear that central banks’ generous support policies are limited.

The policy shift announced by Federal Reserve Chairman Jerome Powell last week jolted the risk-on-asset market. Individual investors, as well as professionals, have voted with their feet, selling risky assets at an all-time high in recent months.

Investors previously saw cryptocurrency as a solution to inflation, low interest rates, or even recession.

Many expected cryptocurrency to continue outperforming other markets despite the FED’s moves.

Some investors, however, have begun to question the functionality of cryptocurrencies. The crypto market’s recent reaction to the FED’s announcements has increased speculation.

Furthermore, a number of the world’s leading cryptocurrency exchanges have laid off employees as a result of the recent sharp drop in the value of the company’s stock and the cryptocurrency market.

Coinbase, BlockFi, Crypto.com, and Gemini are among the well-known companies on the list.

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