Global Interest Rates Are Set to Plummet, Boosting Risk Assets

The global economy is on the cusp of a significant shift in monetary policy, with interest rates poised to plummet. As individuals, we often focus on the minutiae of our daily lives, striving to improve ourselves and achieve our goals. Similarly, in the world of finance, fund managers, stock pickers, and traders tend to concentrate on their areas of expertise, often focusing on a specific country or region. However, this narrow focus can sometimes lead us to overlook the broader trends and events that are shaping the global economy. Central bank policy is a prime example of this. Investors often fixate on the actions of the Federal Reserve and the European Central Bank, while paying scant attention to the policies of smaller central banks. Yet, it is precisely these smaller banks that are now becoming more accommodative, cutting interest rates and increasing liquidity. This shift is likely to have a profound impact on risk assets, including cryptocurrencies. The data suggests that the global economy is undergoing a significant transformation. In 2021 and 2022, inflation skyrocketed, driven by pandemic-related stimulus packages and a surge in consumer spending. However, as central banks responded with aggressive rate hikes, inflation began to roll over, and interest rates started to decline. This trend is now being echoed in smaller economies, such as Canada, Sweden, and Switzerland, which are cutting interest rates and increasing liquidity. The implications of this trend are significant. As borrowing costs decline, fund managers and individual investors will become more willing to take risks, seeking out compelling returns in assets such as cryptocurrencies. The U.S. market, with its strong economic growth and technological revolution, is likely to be a major beneficiary of this trend, with a steady rally in cryptocurrencies such as bitcoin and ethereum. The views expressed here are those of the author and do not necessarily reflect those of the publication or its affiliates.