Facebook digital currency plan raises serious concerns: US Fed chief

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One wild card in the Fed's decision-making has been Trump's highly unusual public pressure on the central bank to cut rates sharply.

Attentions are this morning on the lukewarm state of the USA economy, in the wake of Powell's latest comments which give granularity following June's "no change" interest rate call.

Powell did not mention Trump's criticism as he delivered his prepared remarks, but he did thank lawmakers for the operational "independence" it has given to the Fed.

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"Facebook has a couple billion plus users, so I think you have for the first time the possibility of very broad adoption", he said.

"We can make an argument for the current level of the S&P 500 based on the fundamentals of a high level of employment, low inflation, an accommodative Fed, and hopefully finding an exit ramp on the U.S".

The market rallied through much of June after the central bank first signaled that it's prepared to cut rates to offset slowing global growth and the fallout from USA trade conflicts. The minutes show FOMC member concern over soft economic data such as the weak jobs report from April, weakening indicators for business confidence and spending, decreased manufacturing activity and the ongoing trade tensions - mainly between China and the US.

"Getting little return on your cash and the prospects of [interest] rates going even lower, obviously the competitiveness of gold becomes much better", he said.

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

The US economy is doing "reasonably well", Mr Powell said, but he noted that business investment has "slowed notably", likely because of the uncertainty around trade and global growth.

At their June policy meeting, Fed officials had signaled those concerns might warrant lower rates, and "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 U.S. outlook", Powell said.

The Fed chief stressed that the law guarantees him a four-year term, . and he fully intends to serve it out.

The strong comments from the head of the United States central bank, the country's top financial regulator, adds to misgivings about the project, which has already produced strong skepticism among top policymakers across the globe.

Powell repeated a pledge the Fed made in its June policy statement that officials would "act as appropriate to sustain the expansion".

Expectations for a quarter-percentage-point cut at the Fed's July 31 meeting are 80%, with the remaining 20% hoping for a 50 basis point decrease, according to the CME's FedWatch tool. "To call something hot we need to see some heat".

That change reflects two developments. -China trade tensions, gaining around 6% since then, largely on expectations that major central banks will adopt a looser monetary policy.

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