Definition ∞ A rate hike signifies an increase in the benchmark interest rate set by a central bank. This action typically aims to curb inflation by making borrowing more expensive, thereby reducing spending and slowing economic growth. It is a key tool of monetary policy used to manage economic conditions and stabilize prices.
Context ∞ Central bank rate hikes directly influence the broader financial markets, including digital assets, by increasing the cost of capital and making traditional savings accounts more attractive. This often leads to a reduction in investor appetite for riskier assets like cryptocurrencies. News about impending or enacted rate hikes is a primary driver of short-term crypto market sentiment and price movements.
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