In a recent public speech, Philip Lowe, Governor of the Reserve Bank of Australia (RBA), made it clear that if inflation pressures persist, the committee is always prepared to raise rates again. This hawkish remark quickly shattered market expectations that the Australian central bank was about to fully pivot toward easing, highlighting the stubborn bottom line of major central banks in dealing with inflation.
Most global central banks are currently at a crossroads in terms of policy direction, and Lowe’s comments serve as a reminder that the rate-cutting cycle may not be as smooth as people imagine. Although the market had previously bet that the tightening cycle was nearing its end, persistent core inflation still compels policymakers to keep the option of further tightening borrowing costs on the table, and policy uncertainty has risen again.
In both the foreign exchange and traditional financial markets, the Australian dollar exchange rate and short-term bond yields have turned volatile in tandem, while the U.S. Dollar Index has also received indirect support. Central bank governors’ determination to stick with higher interest rates has made the timing of the global liquidity turning point even more unclear, creating some resistance to valuation repairs in traditional risk assets.
For the crypto market, the macro liquidity environment directly affects the pace at which new incremental capital enters the market. With interest rates in major economies likely to stay higher for longer, capital tends to remain on the sidelines between
$BTC and mainstream coins, and in the near term the market may continue to play out a range-bound tug-of-war.
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