Deutsche Bank: Slow rate cuts present a challenge for crypto

The focus of global financial markets is currently on the rate-cut path of major central banks. Recently, economic data from the United Kingdom and an analysis from Deutsche Bank have provided another important piece to this global puzzle, showing that caution still prevails.

On Thursday (17/7/2025), the latest data showed that the UK labor market is exhibiting clear signs of "cooling down": the number of job vacancies has decreased, the unemployment rate has risen, and wage growth has slowed. Theoretically, these are signals that the economy is weakening and could prompt the central bank to cut interest rates to support growth.

However, in an analysis released after the data, Sanjay Raja, a senior economist at Deutsche Bank, argued that the Bank of England (BOE) does not need to accelerate the pace of its policy easing. He predicts that the unemployment rate will continue to rise slowly, which allows the BOE to continue on its rate-reduction path, but that it will do so "cautiously and step-by-step."

"We believe the conditions to accelerate the pace of rate cuts have not yet been met," Raja emphasized. This stance implies that the BOE, while acknowledging the weakening labor market, remains concerned about other factors, such as persistent services inflation. Therefore, they will prioritize a gradual approach to ensure inflation is fully under control before easing aggressively.

Implications for the Crypto Market

The Bank of England's cautious stance is not an isolated case. It reflects a general trend occurring at other major economies, including the U.S. Federal Reserve. Central banks are signaling that they will cut rates, but at a slow pace that is highly data-dependent.

For the crypto market, which is highly sensitive to global liquidity conditions and risk sentiment, this is important information. This synchronized, cautious trend from major central banks could temper expectations for a "wave" of abundant liquidity to be injected into the market soon. This could lead to a more prolonged period of sideways consolidation for risk assets like Bitcoin and altcoins, rather than an immediate explosive rally.

In summary, while the long-term outlook of lower interest rates remains a positive factor for crypto, the pace of this process may not be as fast as many investors hope. Traders will need to be more patient, closely monitoring the decisions of each central bank to assess the overall global liquidity picture.