• The Fed Chair acknowledged that a softening labor market had caught his attention but reminded us that inflation is still too high.
  • Bitcoin jumped higher but quickly lost any gains.

The odds of a rate cut in September increased slightly on Tuesday, as U.S. Federal Reserve chairman Jerome Powell stated that elevated inflation was not the only threat facing the economy.

Powell said in his prepared remarks before a Senate Committee that “reducing policy restraint to late or too little can adversely weaken the economy and employment.” Powell echoed these thoughts in the following question-and-answer session, stating that the most recent data showed “considerable cooling’ of the labor market, and that the Fed was “very aware” about downside risks.

BTC Price Index and Live Chart – CoinDesk”>(BTC) received the briefest of knee-jerk bounces on the Powell testimony, but quickly gave back any gains and was trading just above $57,000 at press time, modestly higher over the past 24 hours.

The major U.S. indexes are roughly flat, and the yields on the dollar and bonds are slightly higher.

The Fed chairman’s continued focus on inflation has tempered any hint of dovishness. He told the committee that he did not think it would be appropriate to lower the federal funds target rate range until we were more confident about the inflation moving towards 2 percent.

CME FedWatch reports that the odds of a rate cut or two at the Fed meeting in September have increased to 75%. That’s a slight increase from just 24 hours ago but compared to 50% a month ago.

The government will release its latest Consumer Price Index report (CPI) on Thursday. It is expected that prices rose 0.1% in June and that core prices (excluding energy and food) increased 0.2%. The core rate is expected to be 3.4% and the headline rate at 3.1%. Any unexpected change in the September rate-cut odds is likely to be quickly changed.