Bitcoin (BTC) remained relatively stable as Federal Reserve Chairman Jerome Powell delivered his testimony before Senate lawmakers on July 9. During his testimony to the Senate Banking Committee, Rep. John Kennedy (R-LA) asked, "So, when are you going to lower interest rates?" Kennedy's question echoed a broader sentiment among financial market participants eager for clues about the Fed's next moves regarding monetary policy and interest rates. With Bitcoin's price hovering near a five-month low, some investors are hopeful that potential rate cuts could eventually boost cryptocurrency prices.

However, Powell responded, "Today, I’m not going to be sending any signals about the timing of future actions." Lower interest rates could weaken the dollar and support Bitcoin's price, as Bitcoin is seen as an alternative monetary system. Zach Pandl, Head of Research at Grayscale, noted that Powell's comments might be setting the stage for an eventual shift in monetary policy. During his remarks, Powell highlighted the Fed's progress in reducing inflation but also acknowledged the risks of maintaining tight monetary policy for too long.

Last month's year-over-year inflation rate was 2.7%, according to the Fed's preferred measure. Powell reiterated that this rate is "still too high" and stressed the need for continued vigilance until the Fed's 2% goal is firmly within reach.

June employment data showed the U.S. economy adding slightly more jobs than expected, while the unemployment rate rose to 4.1%, its highest level since October 2021. This data has strengthened traders' expectations for upcoming rate cuts. According to CME FedWatch, there is a 71% chance that the Fed will implement an initial cut in September, with a total of two quarter-point cuts anticipated by year-end.

The Fed is navigating its dual mandate of promoting stable prices and maximum employment. As inflation shows signs of easing and the Fed's 2% target seems attainable, there is increasing focus on labor market conditions. Powell recently noted that labor market conditions have returned to pre-pandemic levels, describing them as "relatively tight but not overheated."