Bitcoin (BTC) maintained stability as Federal Reserve Chairman Jerome Powell addressed Senate lawmakers on July 9. During his testimony to the Senate Banking Committee, Rep. John Kennedy (R-LA) posed the question, “So, when are you going to lower interest rates?” This query resonated with financial markets eager for insights into the Fed’s upcoming monetary policy decisions.
With Bitcoin trading near a five-month low, investors are cautiously optimistic about potential rate cuts that could potentially bolster cryptocurrency prices. However, Powell refrained from signaling imminent changes, stating, “Today, I’m not going to be sending any signals about the timing of future actions.”
Lower interest rates typically weaken the dollar, which could favorably impact Bitcoin as an alternative monetary system. Zach Pandl, Head of Research at Grayscale, observed that Powell’s remarks might hint at a future shift in monetary policy. Powell acknowledged progress in curbing inflation but emphasized the risks of prolonged tight monetary measures.
Inflation remains a concern, with June’s year-over-year rate at 2.7%, slightly above the Fed’s 2% target. Powell reiterated the need for vigilance until stable inflation is firmly established.
Recent employment data showed a slight increase in job creation, though the unemployment rate rose to 4.1%, its highest since October 2021. These figures have bolstered expectations among traders for potential rate cuts. According to CME FedWatch, there is a 71% probability of an initial rate cut in September, with expectations for two quarter-point cuts by year-end.
The Fed continues to navigate its dual mandate of price stability and maximizing employment. With inflation trends improving and the labor market reflecting pre-pandemic conditions—described by Powell as “relatively tight but not overheated”—attention now focuses on sustaining economic stability amidst evolving global dynamics.
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