The European Central Bank is moving further and further away from its roots: Now the ECB President, Christine Lagarde, announced on Wednesday that she was rethinking the inflation target. Such a change would have serious consequences for German savers – it remains a driver for Bitcoin Rush.
„We have to thoroughly analyze the forces that are driving inflation dynamics today and consider whether and how we should adapt our strategy in response, “ said ECB chief Christine Lagarde on Wednesday at a conference in Frankfurt. “We should have an inflation target that is credible and that the public can easily understand. ”
After the US Federal Reserve, the European Central Bank is now also shaking its inflation target as a “crisis preventer ” . With this argument, the ECB could pump even more cheap money into the markets and, despite rising inflation, keep the key interest rate at zero or even lower it further. Such a step goes against the 2003 Treaty on the Functioning of the European Union, which sets the primary objective of the ECB in ensuring price stability. A central bank that deviates significantly from its primary goals could lose credibility. Is Bitcoin now tipping the scales?
Pigeons versus falcons
Below, but close to, two percent. This is the current inflation target of the ECB in order to ensure price stability. The European monetary authorities will probably miss this target for the eighth time in a row this year. Since 2013, the annual rate of inflation has been well below the “below but close to two percent”. With 64-year-old Lagarde, a lot will change in the euro zone. It will let inflation off the leash.
Lagardefollowed as a monetary policy „dove“ on the Italian central banker Mario Draghi, who was also not averse to a loose monetary policy. The “pigeons” are considered supporters of a loose and expansionary monetary policy. They offer flagrant resistance to the hawks, who advocate restrictive monetary policy and see the fight against inflation as one of their main tasks. So everything indicates that the money party at the top will continue for the time being and that the hawks are probably going through difficult times. But while the peregrine falcon is chasing the pigeons, the split in the camps is helping Bitcoin, Ethereum and Ripple in particular to generate liquidity.
Emergency exit: Bitcoin
In particular, the global expansion of expansionary monetary policy and efforts by governments around the world to compensate for recession trends with government spending provided fuel in the crypto world. The mixture of escalating government debt ratios – i.e. the percentage ratio of a country’s debt to gross domestic product – and increasing price pressure had evidently led investors to increasingly look for opportunities to invest outside the traditional system of euros, US dollars and other national currencies . In the fight against inflation and devaluation of fiat Währunge n now see many investors to safe haven in Bitcoin or gold. After the first corona shock, both assets quickly grew again.