On Tuesday, Federal Reserve Chairman Jerome Powell said in testimony before a Senate committee that high inflation is not the only risk facing the economy, making a monthly rate cut slightly more likely.

“Reducing policy restrictions too late or too little could unduly weaken economic activity and employment,” Powell mentioned in his Humphrey-Hawkins testimony. In the subsequent question-and-answer session, Powell further noted that the latest data showed a “clear cooling” in the labor market and that the Fed was “very aware” of the downside risks.

Bitcoin (BTC) prices briefly rose after Powell’s testimony but then retreated. At press time, Bitcoin prices were just above $57,000, up slightly over the past 24 hours.

A check of traditional markets showed that major U.S. stock indexes were basically flat, while the U.S. dollar and bond yields rose slightly.

Despite the dovish tone of Powell’s speech, his continued focus on inflation was still evident. "Until we gain greater confidence that inflation is moving consistently toward 2%, we do not believe it is appropriate to lower the target range for the federal funds rate," he said.

The odds that the Fed will make one or more rate cuts in September are now about 75%, up slightly from 24 hours ago and up from 50% a month ago, according to CME FedWatch.

In addition, the latest inflation data, due on Thursday, is in sharp focus. The government's June Consumer Price Index (CPI) report is expected to show prices rose 0.1% last month, with core prices (excluding food and energy) rising 0.2%. On an annual basis, overall inflation is expected to be 3.1% and core inflation to be 3.4%. Any unexpected data could quickly change the odds of a September rate cut.