Fed rate cut appears likely as Jay Powell prepares to address Congress

A currency trader walks by the screens showing the Korea Composite Stock Price Index, right and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room in Seoul South Korea Monday

After raising the key borrowing rate nine times since 2015 as the economy expanded, most recently in December, the Fed last month opened the door to a rate cut amid signs of slowing.

Trump handpicked Powell more than a year ago, but has not shied away from criticizing the central bank head.

But relentless pressure from President Trump for a rate cut could complicate matters for a Fed that prizes its independence.

Federal Reserve Chairman Jerome Powell says that Facebook's new digital currency, Libra, "raises many serious concerns" and will be closely monitored by US and overseas regulators.

The market held onto expectations that policymakers will lower the benchmark interest rate by 25 basis points. Bond yields fell, sending the yield on the 10-year Treasury note down to 2.05% from 2.10% just before Powell's remarks were released.

The U.S. Financial Stability Oversight Council, a federal organization created in 2010 that operates under the auspices of the U.S. Treasury Department, will also look into the project.

"We still think the odds favour a 25 bps "insurance" cut", said Kevin Cummins, a senior USA economist at NatWest Markets.

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"Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the United States economic outlook", Powell said in testimony before the House Financial Services Committee.

Delivering the Fed's semi-annual monetary report to Congress, Powell sends the strongest signal yet that the central bank is ready to cut interest rates for the first time in a decade, possibly as soon as the July meeting.

Federal Reserve Chairman Jerome Powell appeared in Congress Wednesday to begin two days of testimony to discuss potential fiscal policy changes and the state of the US economy. Investors still see a 100% likelihood of a rate cut this month.

Powell suggested last month the Fed could cut rates at its next policy meeting July 30, but experts feel a June jobs report that showed better-than-expected growth makes that less likely. -China trade war hurting corporate profits.

That step eased fears that Trump would extend punitive tariffs to an additional $300 billion in Chinese goods, in the process inviting retaliation from Beijing on American exports and likely weakening both nations' economies. And inflation remains chronically below the Fed's target level.

Asian shares turned mixed on Wednesday while rising Treasury yields lifted the dollar as markets wondered if the world's most powerful central banker would confirm or confound expectations for U.S. policy easing this month.

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