Trade, growth concerns continue to weigh on USA economy

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In the Fed's monetary policy report issued last week ahead of Powell's testimony, the trade war received its own analysis, a sign of the attention it is getting within the central bank.

Since Fed officials met last month, when they chose to hold rates steady, "uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the USA economic outlook", he wrote.

"That is very broad across Europe and around Asia, and that continues to weigh", the head of the US central bank said. "It doesn't remove the uncertainty".

The head of the United States central bank has signalled that a cut interest rates is coming after he warned of growing risks to the global economy.

"Given how financial markets remain extremely sensitive to rate cut speculation, there is a lot at stake today with Powell handed the mammoth task of pleasing investors without overpromising".

"I have kind of said what I meant to say on the subject and what I said is the law clearly gives me a four-year term and I fully into to serve it", Powell said.

U.S. Federal Reserve Chairman Jerome Powell said on Wednesday that Facebook's plan to build a digital currency called Libra "cannot go forward" until serious concerns were addressed.

He said that growth in business investment "seems to have slowed notably", possibly because of concerns over slowing global growth and the trade battle between the Trump administration and China.

But later, in the question-and-answer period, several Democratic committee members offered support for Powell's leadership and a rejection of Trump's criticism. "It needs a careful look, so I strongly believe we all need to be taking our time with this".

"Many judged additional monetary policy accommodation would be warranted in the near term should these recent developments prove to be sustained and continue to weigh on the economic outlook, " according to the minutes of the June 18-19 Federal Open Market Committee released Wednesday in Washington.

USA equity markets got off to a bullish start to the day as the S&P 500 Index moved to make an all-time high after hitting the 3,000 mark - a remarkable level that traders have been optimistically eyeing over the past months. The U.S. dollar fell against a basket of other currencies. Benchmark 10-year Treasury notes US10YT=RR last fell 3/32 in price to yield 2.0665%, from 2.056% late on Tuesday. The rate is now in a range from 2.25% to 2.5%.

"Looking at the Treasury market before and after the release of Chair Powell's prepared Testimony, markets appear to have been expecting him to offer a bit of resistance to the idea that a rate cut at the end of this month is a done deal", said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

US economic fundamentals may not have changed much in the days that followed Trump's May 30 comments on Twitter threatening to impose tariffs on Mexico unless the country met his demands for tougher controls on immigrants crossing the US-Mexico border.

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