Pan Gongsheng, the head of the Bank of China, confirmed today that the People’s Bank of China (PBOC) will reduce the 7-day repo rate by 0.2 percentage points. Additionally, the PBOC will lower local banks’ reserve requirement ratio (RRR) by 50 basis points. Though the governor did not provide an exact timeline, he assured the measures would be implemented soon. Depending on economic conditions, another rate cut of 0.25 or 0.5 basis points may occur before the year ends.
These cuts exceeded market expectations, as many analysts had predicted a more modest 10 basis point reduction. Lynn Song, the chief economist for Greater China at ING, said this in response to the PBOC’s move, which is slightly stronger than anticipated.
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Effects OF Influx of Capital In Bitcoin Expected In the Future
Prominent figures in the cryptocurrency space are already forecasting the potential effects of China’s interest rate cut on global markets, particularly Bitcoin. Anthony Pompliano, a well-known investor and Bitcoin advocate, commented that the reduction would likely trigger a surge of cheap capital into markets worldwide. He emphasized that Bitcoin and other assets could be a primary beneficiary of this influx.
Mason Carter, the co-founder of Acropolis, also supported this view and went further and said that in those circumstances, it could even beat more traditional financial assets. Some of the Bitcoin lovers on the X platform also agree with this sentiment that the new interest rate cut by the PBOC will also ensure Bitcoins keep making new highs.
Recent Performance In Bitcoin
The BTC/USD pair has demonstrated fairly robust gains in the past week, primarily due to market expectations after the Federal Reserve’s announcement. The leading cryptocurrency increased by 7.51%, briefly surpassing the $64,000 level. As investors wait to see how China, through the People’s Bank of China, will slash interest rates to increase the relative supply of money available to control inflation, many are waiting to see how Bitcoin will react to more money floating around in the global markets.
Conclusion
As China moves to inject liquidity into its economy through interest rate cuts, the potential impact on Bitcoin and global financial markets is becoming a central topic of discussion. With Bitcoin already showing positive momentum, these economic developments could further bolster its performance in the coming weeks.
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