Federal Reserve Chairman Jerome Powell’s recent Congressional testimony had a mixed impact on the price of Bitcoin. While acknowledging concerns about a softer labor market, Powell emphasized that high inflation remains a significant risk to the economy. This led to a brief uptick in the price of Bitcoin, but the gains were short-lived, and the cryptocurrency was trading just above $57,000 at the time of the press.
Powell’s comments also hinted at the possibility of a September rate cut, with the odds of such a move currently standing at about 75%. This represents a slight increase from previous estimates, indicating growing uncertainty about the economic outlook. The focus remains on inflation, with Powell stating that any decision to reduce interest rates would depend on the trajectory of price growth towards the Fed’s target of 2%.
In addition to Bitcoin, traditional markets showed a muted response to Powell’s testimony, with U.S. stock indexes holding steady and the dollar and bond yields experiencing slight gains. The upcoming release of the June Consumer Price Index (CPI) report is expected to provide further insights into inflation trends, with headline inflation projected to be at 3.1% and core inflation at 3.4% on an annual basis.
The evolving economic landscape is keeping investors on edge, as any unexpected developments in inflation could quickly alter the likelihood of a rate cut in September. Powell’s cautious approach reflects the Fed’s commitment to maintaining economic stability while addressing potential risks. As the situation continues to unfold, market participants will closely monitor key indicators to gauge the trajectory of monetary policy in the coming months.