The French governor of the ECB spilled the beans during a panel organized by the World Economic Forum. Rates are expected to fall this year. What impact on Bitcoin?
Summer rate cut?
To the question of whether Goldman Sachs right to predict the first rate cut in April, the governor was talkative this Tuesday:
“Absent a major surprise in the Middle East, our next change in monetary policy will be a rate cut, probably this year, but I won’t tell you in what season. »
Christine Lagarde spilled the beans today at the microphone of Bloomberg stating that the ECB will likely start cutting rates this summer. Bodes well for bitcoin…
François Villeroy de Galhau, however, revealed that the ECB will not lower rates as low as they were between 2015 and 2022 [0 %] :
“The new normal will not be the abnormality that we experienced from 2015 to 2022, I think that is an important message. […]
“This new normal will likely depend on two economic variables. First, medium-term inflation expectations which could be higher than those of recent years. And this is because of the famous three Ds: De-globalization, Demography, Decarbonization. […]
The second economic variable is the value of what is called the neutral interest rate. We don’t know exactly what that rate is, but we do know that it has stopped falling for the first time in 20 years. For the euro zone, we estimate that the neutral rate is around 0%. […]
This means that if we take these two variables into consideration, […] our key rate could average around 2% over the entire next cycle”.
For information, the neutral interest rate (also called R-Star in economic jargon) refers to the key rate which, after deducting inflation, does not have the effect of stifling economic growth or accelerating it .
No monetary easing for bitcoin in 2024?
In view of the latest developments in the Middle East, and in particular the blockade of the Bab-el-Mandem Strait, we must indeed be cautious.
Attacks on merchant ships with ties to Israel have increased the cost of container shipping tenfold. The detour via Africa pushes the price to $10,000 for a 12-meter container traveling from Asia to the Mediterranean Sea, compared to $1,000 in normal times.
Even the price of the container traveling from Asia to the west coast of the United States has almost doubled.
“The Red Sea crisis has increased transport costs and indirectly freight rates to the United States”said Kang Shuchun, director of the China Logistics and Purchasing Federation at Global Times this Tuesday.
Let us also recall that Yemen has threatened to strike Saudi oil infrastructure. It would not be the first time. Production of 5.7 million bpd was interrupted for several weeks in 2019 following a drone attack.
All this to say that the ECB and the Fed will postpone their rate cuts if inflation rises.
EQ is also an important variable. The Deputy Managing Director of the IMF Gita Gopinath declared during the same panel that “QE should be used less often than it has been in the past.” The French governor did not seem to be of the same opinion…
While waiting for the inevitable drop in rates, ETFs and halving should be enough for bitcoin to reach a new high.
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