This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/live/2017/mar/15/federal-reserve-interest-rates-uk-unemployment-business-live
The article has changed 22 times. There is an RSS feed of changes available.
| Version 16 | Version 17 |
|---|---|
| US Federal Reserve raises interest rates - live updates | |
| (35 minutes later) | |
| 6.19pm GMT | |
| 18:19 | |
| Fed: inflation target is symmetric | |
| Significantly, the Federal Reserve has also stated that its inflation target is symmetric. | |
| In layman’s terms, that means it is prepared to tolerate prices rising faster than its 2% target. That’s a dovish signal (which explains why the dollar has fallen) | |
| #FOMC hikes #rates 25bp, statement mostly as expected EXCEPT on inflation where they seem to start to contemplate inflation overshoot | |
| 6.16pm GMT | |
| 18:16 | |
| Dow jumps, but dollar falls | |
| Wall Street likes what it sees! The Dow Jones index has now jumped by 86 points to 20,929, a gain of 0.4%. | |
| The S&P 500, and the tech-focused Nasdaq index, are both up. | |
| The dollar, though, is sinking. That’s because the Fed hasn’t taken a hawkish line and predicted more rate hikes in 2017 or 2018. | |
| 10yr US real yields and the BBG dollar index.falling in unison. Might be time for a beer pic.twitter.com/qSOGltLwGZ | |
| 6.14pm GMT | |
| 18:14 | |
| Why the Fed raised interest rates | |
| Today’s statement shows that the Fed still believes that the US economy continues to recover, and can cope with higher borrowing costs. | |
| It says that ‘fixed investment’ by US firms appears to have firmed; that indicates that companies are confident about growth prospects. | |
| It also expects inflation to stabilise around its 2% target in the medium term - a sign that it doesn’t intent to hike rates aggressively. | |
| The Fed also says that the near-term risks to the US economy are ‘roughly balanced’. | |
| Here’s a key section of the report: | |
| Information received since the Federal Open Market Committee met in February indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. | |
| Job gains remained solid and the unemployment rate was little changed in recent months. Household spending has continued to rise moderately while business fixed investment appears to have firmed somewhat. | |
| 6.08pm GMT | |
| 18:08 | |
| Here’s the new Fed dot plot, showing where policymakers expect interest rates to be over the next few years. | |
| There are a few minor moves, but the bottom line is that the Fed still expects three rate hikes this year, and in 2018. | |
| Dot Plot March 2017 vs. December 2016: pic.twitter.com/76hoI1H5cl | |
| 6.06pm GMT | |
| 18:06 | |
| The Federal Reserve still expects to raise interest rates three times this year (including today’s move). | |
| Mean of FOMC's 2017 dots rose to 3.1 hikes from 3.0 | |
| 6.04pm GMT | |
| 18:04 | |
| The decision to raise US interest rates is not unanimous, though! | |
| Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, argued against a rate hike. | |
| He’s been arguing that there isn’t enough pressure on wages to justify a hike. | |
| The other nine policymakers outvoted Kashkari, though, and decided a rate hike was needed. | |
| *FED RAISES BENCHMARK RATE TO 0.75%-1%; KASHKARI DISSENTS | |
| 6.00pm GMT | |
| 18:00 | |
| FEDERAL RESERVE DECISION | |
| Breaking! The Federal Reserve has voted to raise US interest rates at today’s meeting. | |
| The Fed has responded to the latest solid economic data by hiking borrowing costs by a quarter of one percent. | |
| That moves the Federal Funds rate up to 0.75% to 1.0% (up from 0.5% to 0.75%) | |
| It’s the first interest rate rise in 2017 (the last one was in December), and only the third since the financial crisis struck. | |
| This won’t shock Wall Street, as most economists had predicted a hike today. | |
| But everyone is now racing to read the statement, and to prepare for Janet Yellen’s press conference in 30 minutes time. | |
| More to follow! | |
| 5.58pm GMT | |
| 17:58 | |
| Not everyone is excited, though.... | |
| Waiting on the fed like pic.twitter.com/EWdZwgtptt | |
| 5.50pm GMT | |
| 17:50 | |
| The excitement is building.... | |
| 10 MINUTES TIL FED | |
| 5.43pm GMT | 5.43pm GMT |
| 17:43 | 17:43 |
| Fed decision: What to watch for | Fed decision: What to watch for |
| This was the scene on Wall Street a little while ago, as traders got ready for the Fed’s decision on interest rates: | This was the scene on Wall Street a little while ago, as traders got ready for the Fed’s decision on interest rates: |
| With a rate hike widely expected, the real questions are: | With a rate hike widely expected, the real questions are: |
| Kit Juckes of French bank Societe Generale says investors will look closely at the ‘dot plot’ produced by the Fed, showing how policymakers expect borrowing costs to rise. | Kit Juckes of French bank Societe Generale says investors will look closely at the ‘dot plot’ produced by the Fed, showing how policymakers expect borrowing costs to rise. |
| The Fed is a pussy-cat that would like to change its spots into something more like a leopard’s. In practical terms, that means that this evening’s FOMC announcement (6pm GMT, with a press conference half an hour later) is all about the Fed’s projections rather than whether they raise rates or not. | The Fed is a pussy-cat that would like to change its spots into something more like a leopard’s. In practical terms, that means that this evening’s FOMC announcement (6pm GMT, with a press conference half an hour later) is all about the Fed’s projections rather than whether they raise rates or not. |
| Anything other than a 25bp rate hike would be a huge surprise to the market | Anything other than a 25bp rate hike would be a huge surprise to the market |
| Discounting that possibility on the grounds that the Fed is so (too) obsessed with managing market expectations ahead of policy moves, what we’ll watch are the ‘dots’ showing FOMC’s projections of where Fed Funds might go. Market pricing of Fed Funds through 2017-19 is at the bottom end of what the Fed currently projects. | Discounting that possibility on the grounds that the Fed is so (too) obsessed with managing market expectations ahead of policy moves, what we’ll watch are the ‘dots’ showing FOMC’s projections of where Fed Funds might go. Market pricing of Fed Funds through 2017-19 is at the bottom end of what the Fed currently projects. |
| Our US economists think that the 2017/18 dots probably won’t move but beyond that, an upward adjustment is possible to send a signal to the market that the FOMC is serious about normalising policy. | Our US economists think that the 2017/18 dots probably won’t move but beyond that, an upward adjustment is possible to send a signal to the market that the FOMC is serious about normalising policy. |
| Updated | |
| at 5.52pm GMT | |
| 5.28pm GMT | 5.28pm GMT |
| 17:28 | 17:28 |
| While we wait for the Fed rate decision, this piece in the FT (£) entitled Brexit means the end of single market access for London is an interesting read. Christian Noyer, the former chairman of the Bank for International Settlements and former governor of the Banque de France, writes: | While we wait for the Fed rate decision, this piece in the FT (£) entitled Brexit means the end of single market access for London is an interesting read. Christian Noyer, the former chairman of the Bank for International Settlements and former governor of the Banque de France, writes: |
| Will London’s financial institutions lose access to the single market after the UK leaves the EU? When one looks at the legal framework, underlying logic and, in particular, precedents from the European Economic Area, the answer is yes. “Brexit means Brexit.” | Will London’s financial institutions lose access to the single market after the UK leaves the EU? When one looks at the legal framework, underlying logic and, in particular, precedents from the European Economic Area, the answer is yes. “Brexit means Brexit.” |
| There are three conditions for full access to the EU single market and “passporting rights” for financial institutions. First, implementation of EU regulations under the control of the European Court of Justice; second, payment of a sizeable contribution to the EU budget; and third, the “four freedoms”. A country refusing to meet these conditions cannot be part of the EU single market because it rejects the market’s logic. It’s as simple as that. | There are three conditions for full access to the EU single market and “passporting rights” for financial institutions. First, implementation of EU regulations under the control of the European Court of Justice; second, payment of a sizeable contribution to the EU budget; and third, the “four freedoms”. A country refusing to meet these conditions cannot be part of the EU single market because it rejects the market’s logic. It’s as simple as that. |
| Some observers, however, believe they can secure entry through the back door after exiting through the front. It is called “free access on the basis of regulatory equivalence”. It is worth noting that, if this were truly possible, the foundations of the single market would be undermined, a key element of EU cohesion would be destroyed and the entire EEA concept would probably die. | Some observers, however, believe they can secure entry through the back door after exiting through the front. It is called “free access on the basis of regulatory equivalence”. It is worth noting that, if this were truly possible, the foundations of the single market would be undermined, a key element of EU cohesion would be destroyed and the entire EEA concept would probably die. |
| 5.21pm GMT | 5.21pm GMT |
| 17:21 | 17:21 |
| European stock markets have now closed. | European stock markets have now closed. |
| The FTSE 100 in London rose 0.15% to 7368.64 | The FTSE 100 in London rose 0.15% to 7368.64 |
| The Dax in Frankfurt rose 0.18% to 12,009.87 | The Dax in Frankfurt rose 0.18% to 12,009.87 |
| The CAC in Paris rose 0.23% to 4,985.48 | The CAC in Paris rose 0.23% to 4,985.48 |
| The Ibex in Madrid rose 0.79% to 9,983.20 | The Ibex in Madrid rose 0.79% to 9,983.20 |
| The FTSE MiB in Milan rose 1.2% to 19,774.02 | The FTSE MiB in Milan rose 1.2% to 19,774.02 |
| 5.17pm GMT | 5.17pm GMT |
| 17:17 | 17:17 |
| Renaultgate? Shares in the French carmaker fell today after a French newspaper report claimed its vehicles were equipped with software allowing them to cheat in pollution tests. | Renaultgate? Shares in the French carmaker fell today after a French newspaper report claimed its vehicles were equipped with software allowing them to cheat in pollution tests. |
| Libération said it had obtained an investigative document from the economy ministry, which indicated that two models – the Renault Captur and the Clio IV – spewed emissions more than 300% above the legal limit in real-life conditions. | Libération said it had obtained an investigative document from the economy ministry, which indicated that two models – the Renault Captur and the Clio IV – spewed emissions more than 300% above the legal limit in real-life conditions. |
| Renault described the article as “unbalanced” but declined to comment further, saying it had no access to the confidential investigation. | Renault described the article as “unbalanced” but declined to comment further, saying it had no access to the confidential investigation. |
| As a consequence, Renault cannot confirm the veracity, completeness and reliability of the information published in the said article. Renault will prove its compliance with the regulations and reserves its explanations for the judges in charge of investigating this case. | As a consequence, Renault cannot confirm the veracity, completeness and reliability of the information published in the said article. Renault will prove its compliance with the regulations and reserves its explanations for the judges in charge of investigating this case. |
| The company said its vehicles had met regulatory standards and stressed that “they are not equipped with cheating software affecting anti-pollution systems”. | The company said its vehicles had met regulatory standards and stressed that “they are not equipped with cheating software affecting anti-pollution systems”. |
| French prosecutors said in January that they would look into possible cheating by Renault, after independent experts found high levels of diesel emissions at several carmakers, including Renault. | French prosecutors said in January that they would look into possible cheating by Renault, after independent experts found high levels of diesel emissions at several carmakers, including Renault. |
| Renault’s premises were also raided, in the aftermath of the Volkswagen emissions scandal in September 2015. The German carmaker admitted to installing software in its vehicles to cheat US diesel emissions tests. Renault recalled 15,000 cars last year over excessive levels of harmful gases, but the company insisted there was no evidence of deliberate wrongdoing. | Renault’s premises were also raided, in the aftermath of the Volkswagen emissions scandal in September 2015. The German carmaker admitted to installing software in its vehicles to cheat US diesel emissions tests. Renault recalled 15,000 cars last year over excessive levels of harmful gases, but the company insisted there was no evidence of deliberate wrongdoing. |
| Updated | Updated |
| at 5.18pm GMT | at 5.18pm GMT |
| 4.24pm GMT | 4.24pm GMT |
| 16:24 | 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. | 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: | 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. | 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. | 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 | 4.12pm GMT |
| 16:12 | 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. | 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 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 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. | 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 | Updated |
| at 4.18pm GMT | 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 processing tax refunds by the US government weighed on consumers’ ability to spend in February. Compared with February last year, retail sales were up 5.7%. | Also, delays in processing tax refunds by the US government weighed on consumers’ ability to spend in February. Compared with February last year, retail sales were up 5.7%. |
| Updated | Updated |
| at 4.43pm GMT | at 4.43pm GMT |