Definition ∞ An interest rate hike is an increase in the benchmark interest rate set by a central bank, which influences borrowing costs across the economy. This monetary policy action is typically implemented to curb inflation or cool an overheating economy. Higher interest rates can make traditional investments more attractive relative to riskier assets.
Context ∞ Interest rate hikes by major central banks significantly impact global financial markets, including the cryptocurrency sector. These increases can lead to reduced liquidity and a shift of capital away from speculative assets like cryptocurrencies towards more stable, yield-bearing traditional investments. Crypto news frequently analyzes the Federal Reserve’s decisions and their potential effects on digital asset prices, market sentiment, and overall investment flows.
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