Global Liquidity Tightens: Four Central Banks Raise Rates in Eight Days
Four central banks made significant monetary policy decisions in just eight days, leaving markets to adjust to the new landscape. The European Central Bank (ECB) raised its deposit rate to 2.50% on September 10, effective from the 16th. Eight days later, three other banks followed suit within 72 hours: the Federal Reserve (Fed), the Bank of England (BoE), and the Bank of Japan (BoJ).
The Fed raised its rates by 25 basis points on Wednesday, September 16, to 3.75-4.00%, the first increase since 2023. The BoE maintained a status quo on Thursday, September 17, at 3.75%, while the BoJ raised its key rate by 25 basis points on Friday, September 18, to 1.25%. Governor Kazuo Ueda of the BoJ cautioned that future hikes would be carefully considered.
The yen's value declined in response to the BoJ's decision, and Bitcoin (BTC) remained steady between $75,000 and $77,000 since Wednesday. The yen carry trade, which involves borrowing at nearly zero rates in Japan to invest in higher-yielding assets elsewhere, is under pressure due to the rate hike.