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| UK jobless rate hits joint lowest since 1975; markets await US interest rate decision - live | UK jobless rate hits joint lowest since 1975; markets await US interest rate decision - live |
| (35 minutes later) | |
| 4.24pm GMT | |
| 16:24 | |
| In London, gains on the FTSE 100 are led by oil and mining firms, keeping the index close to its recent all-time high. But this could change after the Fed decision. | |
| Chris Beauchamp, chief market analyst at online trading platform IG, said: | |
| Indeed, European and UK equities have been more resilient of late than their US counterparts, with some of this down to weaker domestic currencies. The risk for the likes of the FTSE and the Dax is therefore that a less hawkish Fed tonight could spike a rally for sterling and the euro, causing some of the most recent outperformance to reverse. | |
| Overall today has felt like a market that is in dire need of a catalyst, so traders will be hoping that Janet Yellen provides just that. | |
| 4.12pm GMT | |
| 16:12 | |
| On currency markets, the dollar slipped after the disappointing retail sales data – despite expectations of a rate hike from the Fed later today. There are question marks over the rate outlook further out, given the uncertainty surrounding Trump’s fiscal policy. The dollar index drifted 0.2% lower. | |
| The Fed’s “dot plots” – its interest rate projections – currently suggest three rate hikes this year but there is concern that the Fed’s language may sound more dovish than before. | |
| The pound earlier hit its highest level this week, of $1.2258, recovering from an eight-week low yesterday caused by fears of a drawn-out Brexit. Sterling is now trading at $1.2218, up 0.5%. | |
| The euro is also up against the dollar, trading 0.25% higher at $1.0628. Concerns about the outcome of the Dutch parliamentary elections today were offset by market speculation that the European Central Bank may soon unwind its stimulus programme. | |
| Updated | |
| at 4.18pm GMT | |
| 3.53pm GMT | 3.53pm GMT |
| 15:53 | 15:53 |
| Stock markets up ahead of Fed decision | Stock markets up ahead of Fed decision |
| Markets are calm ahead of the eagerly awaited Fed decision, with European stock markets holding on to their gains. | Markets are calm ahead of the eagerly awaited Fed decision, with European stock markets holding on to their gains. |
| FTSE 100 in London up 0.2% | FTSE 100 in London up 0.2% |
| Dax in Frankfurt up 0.2% | Dax in Frankfurt up 0.2% |
| CAC in Paris up 0.25% | CAC in Paris up 0.25% |
| Ibex in Madrid up 0.9% | Ibex in Madrid up 0.9% |
| FTSE MiB in Milan up 1% | FTSE MiB in Milan up 1% |
| On Wall Street, the Dow Jones is 0.2% ahead while the S&P 500 has gained 0.3% and the Nasdaq is flat. | On Wall Street, the Dow Jones is 0.2% ahead while the S&P 500 has gained 0.3% and the Nasdaq is flat. |
| Brent crude has gained 1.3%, to $51.61 a barrel, after data showed US crude stocks fell last week following nine consecutive increases. | Brent crude has gained 1.3%, to $51.61 a barrel, after data showed US crude stocks fell last week following nine consecutive increases. |
| The International Energy Agency said global inventories rose in January for the first time despite the Opec output cuts. But if the oil cartel sticks to its production curbs, the IEA predicted a deficit of 500,000 barrels a day for the first half of this year. | The International Energy Agency said global inventories rose in January for the first time despite the Opec output cuts. But if the oil cartel sticks to its production curbs, the IEA predicted a deficit of 500,000 barrels a day for the first half of this year. |
| 3.37pm GMT | 3.37pm GMT |
| 15:37 | 15:37 |
| Also, delays in issuing tax refunds weighed on consumers’ ability to spend in February. Compared with February last year, retail sales were up 5.7%. | Also, delays in issuing tax refunds weighed on consumers’ ability to spend in February. Compared with February last year, retail sales were up 5.7%. |
| 3.34pm GMT | 3.34pm GMT |
| 15:34 | 15:34 |
| US retail sales weaken | US retail sales weaken |
| Inflation in the US hit a five-year high last month, rising to 2.7%, as we reported earlier. | Inflation in the US hit a five-year high last month, rising to 2.7%, as we reported earlier. |
| At the same time, retail sales weakened, as households bought fewer cars and cut back on discretionary spending, according to the latest data published today. Retail sales rose just 0.1% in February, the weakest reading since August, suggesting the economy lost some momentum in the first quarter. | At the same time, retail sales weakened, as households bought fewer cars and cut back on discretionary spending, according to the latest data published today. Retail sales rose just 0.1% in February, the weakest reading since August, suggesting the economy lost some momentum in the first quarter. |
| Analysts weren’t concerned, though, noting that January’s number was revised higher to a 0.6% rise from 0.4%. | Analysts weren’t concerned, though, noting that January’s number was revised higher to a 0.6% rise from 0.4%. |
| Paul Ashworth, chief US economist at consultancy Capital Economics, said: | Paul Ashworth, chief US economist at consultancy Capital Economics, said: |
| Overall, inflation is trending gradually higher and underlying retail sales are healthy enough. Nothing here to suggest the Fed shouldn’t raise interest rates at the FOMC meeting that concludes later today. | Overall, inflation is trending gradually higher and underlying retail sales are healthy enough. Nothing here to suggest the Fed shouldn’t raise interest rates at the FOMC meeting that concludes later today. |
| 3.23pm GMT | 3.23pm GMT |
| 15:23 | 15:23 |
| Jane Sydenham, investment director of Rathbones Investment Management, says that because a Fed rate hike at today’s meeting has already been priced in, the impact on markets is likely to be small. | Jane Sydenham, investment director of Rathbones Investment Management, says that because a Fed rate hike at today’s meeting has already been priced in, the impact on markets is likely to be small. |
| After flag waving for more than a year, it would be surprising if Yellen didn’t take the opportunity to raise rates today, especially in light of all the positive data. Facing such a known unknown, markets have almost certainly priced this in and the impact is likely to be minimal. | After flag waving for more than a year, it would be surprising if Yellen didn’t take the opportunity to raise rates today, especially in light of all the positive data. Facing such a known unknown, markets have almost certainly priced this in and the impact is likely to be minimal. |
| What investors need to be more mindful of is that this may be just the first of three possible rate rises this calendar year, but other rises will be dependent on continuing strength in economic data and an inflation rate that remains at a manageable level. | What investors need to be more mindful of is that this may be just the first of three possible rate rises this calendar year, but other rises will be dependent on continuing strength in economic data and an inflation rate that remains at a manageable level. |
| 3.13pm GMT | 3.13pm GMT |
| 15:13 | 15:13 |
| So much for Janet Yellen's suggestion that the Fed could run the economy "a little hot" to undo damage of recession https://t.co/dKbs3Txnpl pic.twitter.com/bJ2DGmn9YR | So much for Janet Yellen's suggestion that the Fed could run the economy "a little hot" to undo damage of recession https://t.co/dKbs3Txnpl pic.twitter.com/bJ2DGmn9YR |
| 3.10pm GMT | 3.10pm GMT |
| 15:10 | 15:10 |
| Paul Sirani, chief market analyst at brokerage Xtrade, believes that tonight could mark the beginning of a series of Fed rate hikes. | Paul Sirani, chief market analyst at brokerage Xtrade, believes that tonight could mark the beginning of a series of Fed rate hikes. |
| The way the US economy is moving at the moment, we can see the Fed raising interest rates at least three, if not four, times this year. Although, if Donald Trump gets his way then it will almost certainly be the latter. | The way the US economy is moving at the moment, we can see the Fed raising interest rates at least three, if not four, times this year. Although, if Donald Trump gets his way then it will almost certainly be the latter. |
| Business in the US is arguably strong enough to dust off rates up to 2% this year, but Janet Yellen will be wary of moving too fast with plenty of political uncertainty still circling in Europe. | Business in the US is arguably strong enough to dust off rates up to 2% this year, but Janet Yellen will be wary of moving too fast with plenty of political uncertainty still circling in Europe. |
| And the Bank of England could soon follow suit. | And the Bank of England could soon follow suit. |
| As soon as the Fed moves today, the BoE may not be too far behind. Raising rates amidst the uncertainty of Brexit is of course risky, but with inflation soaring an April rate hike looks about right. | As soon as the Fed moves today, the BoE may not be too far behind. Raising rates amidst the uncertainty of Brexit is of course risky, but with inflation soaring an April rate hike looks about right. |
| 2.51pm GMT | 2.51pm GMT |
| 14:51 | 14:51 |
| Sam Fleming of the FT has written a preview of today’s Fed meeting. | Sam Fleming of the FT has written a preview of today’s Fed meeting. |
| Here’s a flavour: | Here’s a flavour: |
| It would now be a significant shock if the US central bank did not lift the target range for the federal funds rate by another quarter point from the current 0.5 per cent to 0.75 per cent. | It would now be a significant shock if the US central bank did not lift the target range for the federal funds rate by another quarter point from the current 0.5 per cent to 0.75 per cent. |
| The chances of a move were seen by markets at around 95 per cent going into the meeting, according to a CME Group analysis of futures prices. So the issue for investors is judging whether the next move could come as soon as June and whether there is the possibility of four increases this year, rather than the three predicted in December. | The chances of a move were seen by markets at around 95 per cent going into the meeting, according to a CME Group analysis of futures prices. So the issue for investors is judging whether the next move could come as soon as June and whether there is the possibility of four increases this year, rather than the three predicted in December. |
| Either way, the Fed is still likely to characterise its rate-raising plans as “gradual”. | Either way, the Fed is still likely to characterise its rate-raising plans as “gradual”. |
| What to watch at the Fed meeting https://t.co/CveHqW9l6l | What to watch at the Fed meeting https://t.co/CveHqW9l6l |
| 1.37pm GMT | 1.37pm GMT |
| 13:37 | 13:37 |
| Wall Street opens higher | Wall Street opens higher |
| Over in New York, shares are rising at the start of trading. | Over in New York, shares are rising at the start of trading. |
| The Dow Jones industrial average, the S&P 500 and the Nasdaq are all showing modest gains, as investors get ready for the Federal Reserve meeting. | The Dow Jones industrial average, the S&P 500 and the Nasdaq are all showing modest gains, as investors get ready for the Federal Reserve meeting. |
| Paul Sirani, chief market analyst at Xtrade, says the rise in US inflation (see earlier post) means a rate rise is even more likely today: | Paul Sirani, chief market analyst at Xtrade, says the rise in US inflation (see earlier post) means a rate rise is even more likely today: |
| “Today’s figures show inflation climbed to a five-year high for the second consecutive month, reinforcing strong expectations of a Fed interest rate hike on Wednesday. | “Today’s figures show inflation climbed to a five-year high for the second consecutive month, reinforcing strong expectations of a Fed interest rate hike on Wednesday. |
| “Under current levels of inflationary pressures, Janet Yellen has little choice but to pencil in a first rate when the Fed convenes later today. | “Under current levels of inflationary pressures, Janet Yellen has little choice but to pencil in a first rate when the Fed convenes later today. |
| “Despite uncertainty surrounding President Trump’s policies, it remains a question of how many hikes we will see this year, with investors fretting over the prospect of four.” | “Despite uncertainty surrounding President Trump’s policies, it remains a question of how many hikes we will see this year, with investors fretting over the prospect of four.” |
| 1.00pm GMT | 1.00pm GMT |
| 13:00 | 13:00 |
| US inflation hits highest since 2012 ahead of Fed decision | US inflation hits highest since 2012 ahead of Fed decision |
| Just in: America’s inflation rate has hit its highest level since March 2012, underlining why US interest rates are likely to rise later today. | Just in: America’s inflation rate has hit its highest level since March 2012, underlining why US interest rates are likely to rise later today. |
| The US consumer prices index rose by 2.7% year-on-year in February, up from 2.5% in January. On a monthly basis, prices crept up by 0.1%. | The US consumer prices index rose by 2.7% year-on-year in February, up from 2.5% in January. On a monthly basis, prices crept up by 0.1%. |
| Nothing here to scare the Federal Reserve away from raising interest rates in five hours time, I suspect. | Nothing here to scare the Federal Reserve away from raising interest rates in five hours time, I suspect. |
| US Feb CPI no game changer, Citi says. CPI surprised a bit to the upside on a MoM basis, BUT was inline otherwise, including core data. pic.twitter.com/VwpIv4KTXP | US Feb CPI no game changer, Citi says. CPI surprised a bit to the upside on a MoM basis, BUT was inline otherwise, including core data. pic.twitter.com/VwpIv4KTXP |
| 12.46pm GMT | 12.46pm GMT |
| 12:46 | 12:46 |
| And here’s economics editor Larry Elliott, on the worrying slowdown in wage growth: | And here’s economics editor Larry Elliott, on the worrying slowdown in wage growth: |
| Average earnings in the three months to January were 2.3% higher than a year earlier: in the three months to December 2016 they rose at an annual rate of 2.6%. | Average earnings in the three months to January were 2.3% higher than a year earlier: in the three months to December 2016 they rose at an annual rate of 2.6%. |
| These figures speak volumes about the modern labour market and in particular how the balance of power has shifted in the past four decades. Even when jobs are relatively plentiful and inflation is picking up, workers are unwilling or unable to press for higher pay. | These figures speak volumes about the modern labour market and in particular how the balance of power has shifted in the past four decades. Even when jobs are relatively plentiful and inflation is picking up, workers are unwilling or unable to press for higher pay. |
| The reasons for this transformation is obvious: deindustrialisation and the growth of employment in the non-unionised service sector; curbs on the power of trade unions; an increase in labour supply. In addition, the one area where trade union density remains high – the public sector – is subject to a 1% pay cap. | The reasons for this transformation is obvious: deindustrialisation and the growth of employment in the non-unionised service sector; curbs on the power of trade unions; an increase in labour supply. In addition, the one area where trade union density remains high – the public sector – is subject to a 1% pay cap. |
| More here: | More here: |
| 12.32pm GMT | 12.32pm GMT |
| 12:32 | 12:32 |
| Here’s Angela Monaghan’s take on this morning’s UK unemployment report: | Here’s Angela Monaghan’s take on this morning’s UK unemployment report: |
| Britain’s unemployment rate has fallen to its joint lowest level since 1975 but wage growth also slowed in a sign of the fresh squeeze in living standards facing UK households. | Britain’s unemployment rate has fallen to its joint lowest level since 1975 but wage growth also slowed in a sign of the fresh squeeze in living standards facing UK households. |
| The jobless rate fell to 4.7% in the three months to January from 4.8% in the previous three months, matching the rate last seen in 2005. It was last lower in the three months to August 1975, when it was 4.6% according to the Office for National Statistics. | The jobless rate fell to 4.7% in the three months to January from 4.8% in the previous three months, matching the rate last seen in 2005. It was last lower in the three months to August 1975, when it was 4.6% according to the Office for National Statistics. |
| Despite the fall, total pay including bonuses slowed sharply from 2.6% to 2.2%, the lowest since early 2016. Real pay growth – adjusted for inflation – was just 0.7%, the weakest in more than two years. | Despite the fall, total pay including bonuses slowed sharply from 2.6% to 2.2%, the lowest since early 2016. Real pay growth – adjusted for inflation – was just 0.7%, the weakest in more than two years. |
| The employment rate was unchanged at 74.6%, the highest since records began in 1971.... | The employment rate was unchanged at 74.6%, the highest since records began in 1971.... |
| More here: | More here: |
| 11.59am GMT | 11.59am GMT |
| 11:59 | 11:59 |
| Some reaction to Philip Hammond’s handbrake turn on the NICs increase: | Some reaction to Philip Hammond’s handbrake turn on the NICs increase: |
| Overheard in newsroom: "Good news for Barnier and his team: if you can roll over the govt on NICs then wait til the Brexit negotiations." | Overheard in newsroom: "Good news for Barnier and his team: if you can roll over the govt on NICs then wait til the Brexit negotiations." |
| Absolutely no chance the UK government will buckle under pressure from right-wing press on anything Brexit related. | Absolutely no chance the UK government will buckle under pressure from right-wing press on anything Brexit related. |
| I bet Philip Hammond doesn't find his joke about Lamont being sacked 10 weeks after delivering a "last Spring budget" so funny anymore | I bet Philip Hammond doesn't find his joke about Lamont being sacked 10 weeks after delivering a "last Spring budget" so funny anymore |
| No opposition, new team in govt, charging to Brexit, still found a (home-grown) banana-skin to fall over on. Good Job! https://t.co/5nP4ZExAay | No opposition, new team in govt, charging to Brexit, still found a (home-grown) banana-skin to fall over on. Good Job! https://t.co/5nP4ZExAay |