The RBA just took its cash rate to 4.85%. Crypto will feel it later than people expect.
Slowcycles ·
Australia isn't where most people look for a crypto signal. This week the Reserve Bank took its cash rate to 4.85%, the highest since 2008, with six of nine board members voting for the move.
The mechanism is simple enough. A higher cash rate makes the risk-free alternative pay more, and capital that was reaching for duration has somewhere else to sit. It doesn't hit crypto on the day; it works on the margin, for months.
The RBA now sees inflation near 4.5% by the end of this year and back under 3% only at the end of next year, with growth forecast to stay below its 2% potential through 2028. That's a central bank choosing a slow squeeze over a quick one.
We have been here before, roughly. The 2008 comparison gets made for the level, but I'd use 2022: rates went up, the long-duration stuff went down first, and it took a while for the headlines to catch up.
The mechanism is simple enough. A higher cash rate makes the risk-free alternative pay more, and capital that was reaching for duration has somewhere else to sit. It doesn't hit crypto on the day; it works on the margin, for months.
The RBA now sees inflation near 4.5% by the end of this year and back under 3% only at the end of next year, with growth forecast to stay below its 2% potential through 2028. That's a central bank choosing a slow squeeze over a quick one.
We have been here before, roughly. The 2008 comparison gets made for the level, but I'd use 2022: rates went up, the long-duration stuff went down first, and it took a while for the headlines to catch up.