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Markets brace for US Federal Reserve interest rate decision - live updates Markets brace for US Federal Reserve interest rate decision - live updates
(35 minutes later)
3.00pm BST15:00
Nearly seven years of record low interest rates have meant fallow times for savers.
With hindsight, they should have bought shares in tech firms like Amazon, Apple and Netflix instead.
$AAPL, $AMZN and $NFLX have soared over 1,000% in 9 years since Fed last raised rates http://t.co/z3zAFmb4P2 pic.twitter.com/psM42KY3yr
2.56pm BST14:56
JP Morgan analysts like the look of today’s US jobless report (covered an hour ago)
Initial claims decline to 264,000, sends "upbeat signal regarding labor market conditions" - JPM
2.55pm BST14:55
The S&P 500 index has fallen by 0.1% in early New York trading.
One stock stands out - Cablevision shares jumped by over 15%, after European telecoms company Altice Group announced a $17.7bn takeover deal.
2.44pm BST14:44
US stock market opens lower ahead of the Fed
A very cautious open on Wall Street has seen the Dow Jones industrial average dip by 0.25%.
The Dow is down 38 points at 16,701 at pixel time.
Updated at 2.48pm BST
2.19pm BST14:192.19pm BST14:19
Wall Street is feeling the calm before the storm.....Wall Street is feeling the calm before the storm.....
Unsurprisingly quiet overnight session for the Dow - being forecast to open broadly unchaged at 16,740.Unsurprisingly quiet overnight session for the Dow - being forecast to open broadly unchaged at 16,740.
2.13pm BST14:132.13pm BST14:13
Carlyle's Rubenstein: Fed won't hike todayCarlyle's Rubenstein: Fed won't hike today
Private equity magnate David Rubenstein, the founder of The Carlyle Group, made himself a billionaire by reading the markets. And he says the Fed will not raise interest rates this month.Private equity magnate David Rubenstein, the founder of The Carlyle Group, made himself a billionaire by reading the markets. And he says the Fed will not raise interest rates this month.
Speaking on CNBC, Rubenstein argues that the Fed will wait until investors expect a hike before acting. As he put it:Speaking on CNBC, Rubenstein argues that the Fed will wait until investors expect a hike before acting. As he put it:
“The Fed is really the central bank of the world. If the Fed raise rates a little bit, it will have an impact all over the world, particularly in emerging markets.“The Fed is really the central bank of the world. If the Fed raise rates a little bit, it will have an impact all over the world, particularly in emerging markets.
“I think the Fed is sensitive to that, and I think therefore the Fed is likely to wait for another month or two to get additional data and probably telegraph a little bit better than it has now that it’s about ready to do it at a particular time.”“I think the Fed is sensitive to that, and I think therefore the Fed is likely to wait for another month or two to get additional data and probably telegraph a little bit better than it has now that it’s about ready to do it at a particular time.”
Rubenstein is right that the markets aren’t expecting a hike (it’s a 32% chance, ‘pparently).Rubenstein is right that the markets aren’t expecting a hike (it’s a 32% chance, ‘pparently).
The Fed won't raise rates now, David Rubenstein says. Here's why » http://t.co/4P5oPWc8NZ pic.twitter.com/fHpBEuldsYThe Fed won't raise rates now, David Rubenstein says. Here's why » http://t.co/4P5oPWc8NZ pic.twitter.com/fHpBEuldsY
1.57pm BST13:571.57pm BST13:57
Another gobbet of US economic data -- the number of new housing starts fell by 3% in August.Another gobbet of US economic data -- the number of new housing starts fell by 3% in August.
However the number of building permits -- giving permission to construct a new house -- increased by 3.5% during the month, suggesting the market remains quite robust.However the number of building permits -- giving permission to construct a new house -- increased by 3.5% during the month, suggesting the market remains quite robust.
Housing starts slip 3.0% in August after weaker July http://t.co/cX293ABsF3Housing starts slip 3.0% in August after weaker July http://t.co/cX293ABsF3
1.36pm BST13:361.36pm BST13:36
US jobless claims hits two months lowUS jobless claims hits two months low
Here’s something for the Fed to chew on. The number of Americans filing new claims for jobless benefit has hit an eight week low, down by 11,000.Here’s something for the Fed to chew on. The number of Americans filing new claims for jobless benefit has hit an eight week low, down by 11,000.
The initial claims total dropped to 264,000 last week, data just released shows, down from 275,000.The initial claims total dropped to 264,000 last week, data just released shows, down from 275,000.
That’s the lowest level since mid July, and suggests the US labour market remains robust.That’s the lowest level since mid July, and suggests the US labour market remains robust.
1.33pm BST13:331.33pm BST13:33
I’m not sure how much attention Janet Yellen pays to Twitter. But if she’s lurking, she should check out the #chartsforJanet hashtag for some helpful advice on today’s decision:I’m not sure how much attention Janet Yellen pays to Twitter. But if she’s lurking, she should check out the #chartsforJanet hashtag for some helpful advice on today’s decision:
What inflation pressure? #chartsforJanet http://t.co/x9ZvkYXVkx pic.twitter.com/5DV8Y2Mez6What inflation pressure? #chartsforJanet http://t.co/x9ZvkYXVkx pic.twitter.com/5DV8Y2Mez6
"Careful not to jump at shadows." Fed urged to think of the Kiwi experience. http://t.co/NKc9Jxp70D #chartsforJanet pic.twitter.com/Vw0G8Ddl7t"Careful not to jump at shadows." Fed urged to think of the Kiwi experience. http://t.co/NKc9Jxp70D #chartsforJanet pic.twitter.com/Vw0G8Ddl7t
Time for Fed to "declare partial victory" on jobs, and hike rates, says BAML. http://t.co/smmycjeBV7 #chartsforJanet pic.twitter.com/fHeXCmWfX0Time for Fed to "declare partial victory" on jobs, and hike rates, says BAML. http://t.co/smmycjeBV7 #chartsforJanet pic.twitter.com/fHeXCmWfX0
"The market has 'tightened' for the Fed already." Hold fire, says CRT. http://t.co/w5PuaqjPUe #chartsforJanet pic.twitter.com/ImQ3aE48n5"The market has 'tightened' for the Fed already." Hold fire, says CRT. http://t.co/w5PuaqjPUe #chartsforJanet pic.twitter.com/ImQ3aE48n5
1.20pm BST13:201.20pm BST13:20
Reuters has caught up with one of the economists who will be smiling if Janet Yellen announces a rate hike today, but blushing if she doesn’t.Reuters has caught up with one of the economists who will be smiling if Janet Yellen announces a rate hike today, but blushing if she doesn’t.
Here’s a flavour:Here’s a flavour:
“I joke to colleagues, do I still have a job on Friday if I get it wrong on Thursday?” says Citigroup’s William Lee, adding that no, his pay will not be cut if he blows the call.“I joke to colleagues, do I still have a job on Friday if I get it wrong on Thursday?” says Citigroup’s William Lee, adding that no, his pay will not be cut if he blows the call.
Citi goes with a Fed hike and Lee said that investors read research from banks to “stress test” their positions; for that reason, even if he is right that the Fed raises rates but gets the why wrong, “I’m embarrassed.”Citi goes with a Fed hike and Lee said that investors read research from banks to “stress test” their positions; for that reason, even if he is right that the Fed raises rates but gets the why wrong, “I’m embarrassed.”
If he gets the rate call wrong, he will dissect what he might have missed.If he gets the rate call wrong, he will dissect what he might have missed.
12.57pm BST12:5712.57pm BST12:57
I suspect Ipek Ozkardeskaya of London Capital Group speaks for many in the City today, after months of speculation about today’s FOMC meeting.I suspect Ipek Ozkardeskaya of London Capital Group speaks for many in the City today, after months of speculation about today’s FOMC meeting.
Whatever happens. I do not want to hear about #Fed for the next couple of weeks.Whatever happens. I do not want to hear about #Fed for the next couple of weeks.
12.55pm BST12:5512.55pm BST12:55
We’re not expecting any early drama when Wall Street opens in 90 minutes time.We’re not expecting any early drama when Wall Street opens in 90 minutes time.
The futures markets shows the Dow falling just 10 points at the open, to 16,729.The futures markets shows the Dow falling just 10 points at the open, to 16,729.
Nour Al-Hammoury, chief market strategist at ADS Securities in Abu Dhabi, says:Nour Al-Hammoury, chief market strategist at ADS Securities in Abu Dhabi, says:
The long awaited Fed meeting is finally here, but if the Federal reserve delays the hike again their creditability is on the line, but we do not think this is enough of a reason for them to raise rates.The long awaited Fed meeting is finally here, but if the Federal reserve delays the hike again their creditability is on the line, but we do not think this is enough of a reason for them to raise rates.
We are looking for a hold with no change in the current policy, but with an option for the hike in either October or December.We are looking for a hold with no change in the current policy, but with an option for the hike in either October or December.
12.36pm BST12:3612.36pm BST12:36
Back to the Federal Reserve.... and Bloomberg has pulled together a handy guide to the challenge facing the US central bank today.Back to the Federal Reserve.... and Bloomberg has pulled together a handy guide to the challenge facing the US central bank today.
If they don’t raise rates today, then it creates the “Yellen Put” -- the notion that the Fed chief will cave in whenever investors get jittery. That’s not good for credibility, and also risks losing the chance to raise rates gradually.If they don’t raise rates today, then it creates the “Yellen Put” -- the notion that the Fed chief will cave in whenever investors get jittery. That’s not good for credibility, and also risks losing the chance to raise rates gradually.
So they should hike? Not so fast! An ill-timed rate rise can hurt the global economy, and suggest the Fed isn’t taking its mandate on inflation seriouslySo they should hike? Not so fast! An ill-timed rate rise can hurt the global economy, and suggest the Fed isn’t taking its mandate on inflation seriously
Great resource here on the Fed's highly anticipated decision: http://t.co/3nrBFtQi12 @BloombergBrief #FOMC #Fed pic.twitter.com/XDQa3vMQSpGreat resource here on the Fed's highly anticipated decision: http://t.co/3nrBFtQi12 @BloombergBrief #FOMC #Fed pic.twitter.com/XDQa3vMQSp
Updated at 12.47pm BSTUpdated at 12.47pm BST
12.11pm BST12:1112.11pm BST12:11
Helena SmithHelena Smith
Once the Federal Reserve meeting is over tonight, the financial markets can return to fretting about Greece.Once the Federal Reserve meeting is over tonight, the financial markets can return to fretting about Greece.
And three days before crucial Greek elections, polls this morning are indicating that Sunday’s vote is going to be the tightest of ballots.And three days before crucial Greek elections, polls this morning are indicating that Sunday’s vote is going to be the tightest of ballots.
Helena Smith reports from Athens:Helena Smith reports from Athens:
The race to find a stable government that can navigate debt-crippled Greece through its worst economic crisis in decades just seems to be getting tighter and tighter.The race to find a stable government that can navigate debt-crippled Greece through its worst economic crisis in decades just seems to be getting tighter and tighter.
Throughout the four weeks that have preceded this “express” election, surprise has been the dominating force. Nothing has gone quite to plan, either for leftwing former prime minister Alexis Tsipras’ Syriza party or his conservative challenger New Democracy. For the former (if polls are to be believed) the result has been disappointing; for the latter much brighter than perhaps even New Democrats would have believed.Throughout the four weeks that have preceded this “express” election, surprise has been the dominating force. Nothing has gone quite to plan, either for leftwing former prime minister Alexis Tsipras’ Syriza party or his conservative challenger New Democracy. For the former (if polls are to be believed) the result has been disappointing; for the latter much brighter than perhaps even New Democrats would have believed.
A new survey conducted on Tuesday and Wednesday this week by Kapa Research and published in today’s Vima gives Syriza the lead but at 0.6% shows the gap between Syriza and New Democracy narrowing even further. Similarly, Tsipras has the edge over his conservative challenger Vangelis Meimarakis – but only just. The poll showed that while 36.5% thought him more suitable for the post of prime minister, 35.1% also favoured Meimarakis – until recently no force to be reckoned with on the political scene.A new survey conducted on Tuesday and Wednesday this week by Kapa Research and published in today’s Vima gives Syriza the lead but at 0.6% shows the gap between Syriza and New Democracy narrowing even further. Similarly, Tsipras has the edge over his conservative challenger Vangelis Meimarakis – but only just. The poll showed that while 36.5% thought him more suitable for the post of prime minister, 35.1% also favoured Meimarakis – until recently no force to be reckoned with on the political scene.
Once again, the neo-fascist Golden Dawn came in third with 6.7% followed by the socialist democrat Pasok with 5.9%, the communist KKE party with 5.5%, the centrist Potami with 5% and the breakaway far left Popular Unity with 3.5%.Once again, the neo-fascist Golden Dawn came in third with 6.7% followed by the socialist democrat Pasok with 5.9%, the communist KKE party with 5.5%, the centrist Potami with 5% and the breakaway far left Popular Unity with 3.5%.
The Independent Greeks party (Anel), Tsipras’ junior party in government has voter support of 3% in the poll – just enough to cross the threshold and get into the 300-seat parliament.The Independent Greeks party (Anel), Tsipras’ junior party in government has voter support of 3% in the poll – just enough to cross the threshold and get into the 300-seat parliament.
The findings show that crisis-plagued Greece is in for a ride – despite the voter fatigue which also appears to be the other dominant factor in this election.The findings show that crisis-plagued Greece is in for a ride – despite the voter fatigue which also appears to be the other dominant factor in this election.
The stability the country so desperately needs to nourish the political certainty that will allow it to implement the measures – set as the price of being bailed out to the tune of €86bn for a third time since 2009 - may prove to be elusive. Politicians were at pains today to insist that a re-run was out of the question. “There is definitely not going to be a second round of elections,” the former Syriza economy minister Giorgos Stathakis told Skai TV. But with no party set to win a majority and Tsipras ruling out a coalition with New Democracy – forming a government could well be hard.The stability the country so desperately needs to nourish the political certainty that will allow it to implement the measures – set as the price of being bailed out to the tune of €86bn for a third time since 2009 - may prove to be elusive. Politicians were at pains today to insist that a re-run was out of the question. “There is definitely not going to be a second round of elections,” the former Syriza economy minister Giorgos Stathakis told Skai TV. But with no party set to win a majority and Tsipras ruling out a coalition with New Democracy – forming a government could well be hard.
The undecided, says, analysts will play a crucial role but so, too, will those who have vowed to abstain. Such is the worry over the latter that Syriza – now focusing on first-time voters and women, the majority of undecided – has rolled out posters imploring voters to cast ballots.The undecided, says, analysts will play a crucial role but so, too, will those who have vowed to abstain. Such is the worry over the latter that Syriza – now focusing on first-time voters and women, the majority of undecided – has rolled out posters imploring voters to cast ballots.
“No apohi”, it says, using the Greek word for abstention, adding:“No apohi”, it says, using the Greek word for abstention, adding:
“As long as you abstain others make plans against you.”“As long as you abstain others make plans against you.”
The Greek electorate is tired – tired of crisis and tired of the policy options offered by politicians.The Greek electorate is tired – tired of crisis and tired of the policy options offered by politicians.
After Fed uncertainty put to bed this evening, thank goodness for weekend equally-difficult-to-call Greek election result to keep us amusedAfter Fed uncertainty put to bed this evening, thank goodness for weekend equally-difficult-to-call Greek election result to keep us amused
Updated at 12.11pm BSTUpdated at 12.11pm BST
11.45am BST11:4511.45am BST11:45
A glimmer of good news has been spied in Greece, ahead of Sunday’s election. Fewer than one in four adults are officially unemployed, for the first time in over three years:A glimmer of good news has been spied in Greece, ahead of Sunday’s election. Fewer than one in four adults are officially unemployed, for the first time in over three years:
Unemployment dips below 25% in second quarter #Greece http://t.co/Oqmw7OxYkG pic.twitter.com/uor5Aa5qUnUnemployment dips below 25% in second quarter #Greece http://t.co/Oqmw7OxYkG pic.twitter.com/uor5Aa5qUn
11.26am BST11:2611.26am BST11:26
Money has already been flowing out of emerging markets and into the stock markets of advanced economies, in anticipation of higher US interest rates:Money has already been flowing out of emerging markets and into the stock markets of advanced economies, in anticipation of higher US interest rates:
European stocks increasingly seen as safe haven as #Fed decision looms http://t.co/5QofsWKwhs pic.twitter.com/t4hrTWuFMsEuropean stocks increasingly seen as safe haven as #Fed decision looms http://t.co/5QofsWKwhs pic.twitter.com/t4hrTWuFMs
11.15am BST11:1511.15am BST11:15
Just 32%. That’s the market-implied probability that America gets its first interest rate rise since 2006 today.Just 32%. That’s the market-implied probability that America gets its first interest rate rise since 2006 today.
So there could be wild moves if the Fed does hike, as it would not be ‘priced in’.So there could be wild moves if the Fed does hike, as it would not be ‘priced in’.
10.50am BST10:5010.50am BST10:50
UBS: rarely has there been such a divide in opinion among econos & investors on what the Fed should do & what the Fed is most likely to do.UBS: rarely has there been such a divide in opinion among econos & investors on what the Fed should do & what the Fed is most likely to do.
10.48am BST10:4810.48am BST10:48
City investors are adopting a classic “hold-off-and-see” stance ahead of tonight’s Fed decision, says Mike van Dulken, head of research at Accendo Markets.City investors are adopting a classic “hold-off-and-see” stance ahead of tonight’s Fed decision, says Mike van Dulken, head of research at Accendo Markets.
Mike adds:Mike adds:
This announcement is all the more important given its potential to include the first rate hike in a decade, signalling the beginning of the end of extraordinarily cheap money and exit from ‘crisis’ mode.This announcement is all the more important given its potential to include the first rate hike in a decade, signalling the beginning of the end of extraordinarily cheap money and exit from ‘crisis’ mode.
10.42am BST10:4210.42am BST10:42
The US dollar has weakened a little this morning, down 0.3% against the euro to $1.1327.The US dollar has weakened a little this morning, down 0.3% against the euro to $1.1327.
That suggests traders are pricing in ‘no change’ from the Fed tonight.That suggests traders are pricing in ‘no change’ from the Fed tonight.
FX markets relatively subdued ahead of #FOMC. #Dollar selling off slightly since the European open. TM pic.twitter.com/6MlPZRPosBFX markets relatively subdued ahead of #FOMC. #Dollar selling off slightly since the European open. TM pic.twitter.com/6MlPZRPosB
10.21am BST10:2110.21am BST10:21
Moody's: Fed hike is bad for these emerging marketsMoody's: Fed hike is bad for these emerging markets
Brazil, Russia, Turkey and South Africa have most to fear from a US interest rate hike, says rating agency Moody’s in a new report.Brazil, Russia, Turkey and South Africa have most to fear from a US interest rate hike, says rating agency Moody’s in a new report.
It argues that America’s economy could handle a small (0.25%) rise in borrowing costs, but several emerging nations would struggle if their currencies weakened.It argues that America’s economy could handle a small (0.25%) rise in borrowing costs, but several emerging nations would struggle if their currencies weakened.
Here’s the highlights:Here’s the highlights:
Countries most at risk from US rate hike are Brazil, Russia, Turkey, South Africa, which have "severe domestic challenges" - Moody'sCountries most at risk from US rate hike are Brazil, Russia, Turkey, South Africa, which have "severe domestic challenges" - Moody's
10.13am BST10:1310.13am BST10:13
With nine hours until the biggest Fed decision in years, Europe’s main stock markets are all subdued.With nine hours until the biggest Fed decision in years, Europe’s main stock markets are all subdued.
The FTSE 100, German Dax and French CAC are all in the red, with investors reluctant to take big positions before tonight’s drama.The FTSE 100, German Dax and French CAC are all in the red, with investors reluctant to take big positions before tonight’s drama.
Tony Cross, market analyst at Trustnet Direct, reports that trading is quiet.Tony Cross, market analyst at Trustnet Direct, reports that trading is quiet.
The jury remains out as to whether Janet Yellen and her team will be able to push through a rate hike, with yesterday’s downturn in US inflation data being the latest roadblock, but it seems inevitable that if policymakers across the Atlantic do hike rates then equity markets globally will be in for a rough end to the week.The jury remains out as to whether Janet Yellen and her team will be able to push through a rate hike, with yesterday’s downturn in US inflation data being the latest roadblock, but it seems inevitable that if policymakers across the Atlantic do hike rates then equity markets globally will be in for a rough end to the week.
9.58am BST09:589.58am BST09:58
We already have one central bank decision, and it’s a no change.We already have one central bank decision, and it’s a no change.
The Swiss National Bank has left interest rates pegged at between minus 0.25% and minus 1.25%, but warned it could take action to weaken the swiss franc, if needed.The Swiss National Bank has left interest rates pegged at between minus 0.25% and minus 1.25%, but warned it could take action to weaken the swiss franc, if needed.
Switzerland introduced negative interest rates last December, to combat the surge of capital into its economy that was pushing the franc uncompetitively high against the euro.Switzerland introduced negative interest rates last December, to combat the surge of capital into its economy that was pushing the franc uncompetitively high against the euro.
9.33am BST09:339.33am BST09:33
After June's no show, if Yellen's #FOMC don't hike tonight, she will be the financial equivalent of #Wenger in the transfer marketAfter June's no show, if Yellen's #FOMC don't hike tonight, she will be the financial equivalent of #Wenger in the transfer market
9.25am BST09:259.25am BST09:25
Bloomberg has surveyed 113 economists, and a narrow majority predicted the Fed will not raise rates today.Bloomberg has surveyed 113 economists, and a narrow majority predicted the Fed will not raise rates today.
Bloomberg’s Jon Ferro says the FOMC members must weigh up “the good, the bad and the complete unknown” when they gather today.Bloomberg’s Jon Ferro says the FOMC members must weigh up “the good, the bad and the complete unknown” when they gather today.
The good is the labour market, with the US unemployment rate dropping to just 5.1% in August. The bad is inflation. Data released yesterday showed that consumer prices grew by just 0.2% over the last 12 months, far from the Fed’s target of 2%.The good is the labour market, with the US unemployment rate dropping to just 5.1% in August. The bad is inflation. Data released yesterday showed that consumer prices grew by just 0.2% over the last 12 months, far from the Fed’s target of 2%.
And the unknown factor is the situation in the global economy, the potential ructions from China’s slowdown as it rebalances its economy.And the unknown factor is the situation in the global economy, the potential ructions from China’s slowdown as it rebalances its economy.
Jon also points out that 15 central banks have hiked rates in the financial crisis, only to reverse course and cut (that includes the European Central Bank in 2011).Jon also points out that 15 central banks have hiked rates in the financial crisis, only to reverse course and cut (that includes the European Central Bank in 2011).
9.01am BST09:019.01am BST09:01
Tonights #FOMC decision, latest polls: #Bloomberg: 30% chance of a rate hike #FT: 47% chance of a rate hike #Fed #USDTonights #FOMC decision, latest polls: #Bloomberg: 30% chance of a rate hike #FT: 47% chance of a rate hike #Fed #USD
8.49am BST08:498.49am BST08:49
Economists: It's a very close callEconomists: It's a very close call
Around half of the top economists in the City and on Wall Street will feel pretty smug when the Fed decision is announced.Around half of the top economists in the City and on Wall Street will feel pretty smug when the Fed decision is announced.
The other half may have some explaining to do.The other half may have some explaining to do.
Reuters polled 80 economists from Europe and North America about today’s decision; 45 predicted the Fed will hold, while 35 plumped for a hike.Reuters polled 80 economists from Europe and North America about today’s decision; 45 predicted the Fed will hold, while 35 plumped for a hike.
An earlier poll had shown a slight majority in favour of a rate rise, so it appears that the recent weakish economic data, and August’s market turmoil, has prompted a rethink.An earlier poll had shown a slight majority in favour of a rate rise, so it appears that the recent weakish economic data, and August’s market turmoil, has prompted a rethink.
Standard Chartered senior economist Thomas Costerg now expects the Fed to raise in December. Here’s why:Standard Chartered senior economist Thomas Costerg now expects the Fed to raise in December. Here’s why:
“Fed Chair Janet Yellen has been conspicuously silent, with no significant comments since July’s congressional testimony.”“Fed Chair Janet Yellen has been conspicuously silent, with no significant comments since July’s congressional testimony.”
“We think the recent global market volatility – driven by ongoing concerns about global growth – has raised the bar for a first rate hike near-term.”“We think the recent global market volatility – driven by ongoing concerns about global growth – has raised the bar for a first rate hike near-term.”
Updated at 8.51am BSTUpdated at 8.51am BST
8.36am BST08:368.36am BST08:36
The Fed could potentially decide to leave interest rates unchanged, but make it very clear that a hike is coming soon.The Fed could potentially decide to leave interest rates unchanged, but make it very clear that a hike is coming soon.
Alternatively, it could increase borrowing costs but then attempt to reassure investors that it will remain cautious.Alternatively, it could increase borrowing costs but then attempt to reassure investors that it will remain cautious.
Kit Juckes of Société Générale, another French bank, explains:Kit Juckes of Société Générale, another French bank, explains:
A clear message that a hike is ‘on its way’ is expected, so inaction today will likely only have a significant impact if the message is more dovish than that.A clear message that a hike is ‘on its way’ is expected, so inaction today will likely only have a significant impact if the message is more dovish than that.
A 25% rate hike would be a surprise to the market (though not to SG Economists) but the biggest surprise of all would be failure to lace any decision with dovish undertones.A 25% rate hike would be a surprise to the market (though not to SG Economists) but the biggest surprise of all would be failure to lace any decision with dovish undertones.
And looking ahead, Kit sees the US dollar rising, giving emerging markets another headache.And looking ahead, Kit sees the US dollar rising, giving emerging markets another headache.
The first reaction to the policy decision may not tell us much but over the coming months, a sluggish global economy, slowing growth in China and continued monetary policy divergence will dictate currency trends.The first reaction to the policy decision may not tell us much but over the coming months, a sluggish global economy, slowing growth in China and continued monetary policy divergence will dictate currency trends.
There will be further downward pressure on commodities and commodity exporters’ currencies and there will be further upward pressure on the dollar.There will be further downward pressure on commodities and commodity exporters’ currencies and there will be further upward pressure on the dollar.
8.30am BST08:308.30am BST08:30
French bank BNP Paribas predicts that the Fed will not raise interest rates today.French bank BNP Paribas predicts that the Fed will not raise interest rates today.
Analyst Andrew MacFarlane explains (with some bonus US history thrown in):Analyst Andrew MacFarlane explains (with some bonus US history thrown in):
So we finally arrive at this most pivotal of days which is likely to have major implications around the world; yes, it is Constitution Day in the US, the annual celebration of that fateful day in 1787 when a committee of delegates signed the final draft in Philadelphia. It seems almost fitting that 228 years later, a committee of delegates will today meet at the Federal Reserve to discuss the future of the United States; let’s just hope they don’t have to make 27 amendments as well…So we finally arrive at this most pivotal of days which is likely to have major implications around the world; yes, it is Constitution Day in the US, the annual celebration of that fateful day in 1787 when a committee of delegates signed the final draft in Philadelphia. It seems almost fitting that 228 years later, a committee of delegates will today meet at the Federal Reserve to discuss the future of the United States; let’s just hope they don’t have to make 27 amendments as well…
BNP is calling for no change to rates, few changes in the policy statement, and a dovish set of economic and interest rate projections.BNP is calling for no change to rates, few changes in the policy statement, and a dovish set of economic and interest rate projections.
Updated at 8.31am BSTUpdated at 8.31am BST
8.29am BST08:298.29am BST08:29
Markets: 30% chance of a rate hike todayMarkets: 30% chance of a rate hike today
There is a 30% chance that the Fed will raise interest rate tonight, according to the Fed funds futures market.There is a 30% chance that the Fed will raise interest rate tonight, according to the Fed funds futures market.
That market, which allows investors to wager on rate moves, also shows that a majority expect rates to rise before Christmas.That market, which allows investors to wager on rate moves, also shows that a majority expect rates to rise before Christmas.
Morning Note: 1. FOMC decision day. Economists divided. 2. Bridgewater's Ray Dalio says don't go. 3. Markets say NO pic.twitter.com/4giRglmLxRMorning Note: 1. FOMC decision day. Economists divided. 2. Bridgewater's Ray Dalio says don't go. 3. Markets say NO pic.twitter.com/4giRglmLxR
8.15am BST08:158.15am BST08:15
There’s an edgy mood in Europe’s stock markets this morning.There’s an edgy mood in Europe’s stock markets this morning.
Investors as nervous, as they simply don’t know for sure which way Janet Yellen and her colleagues on the Federal Open Market Committee (FOMC) will jump tonight.Investors as nervous, as they simply don’t know for sure which way Janet Yellen and her colleagues on the Federal Open Market Committee (FOMC) will jump tonight.
The FTSE 100 index of leading UK shares has dipped by 12 points, or just 0.2%, in early trading. Here’s the biggest fallers:The FTSE 100 index of leading UK shares has dipped by 12 points, or just 0.2%, in early trading. Here’s the biggest fallers:
Updated at 8.16am BSTUpdated at 8.16am BST
8.03am BST08:038.03am BST08:03
Asian stock markets have risen today, on speculation that the Federal Reserve will resist the pressure to hike interest rates today.Asian stock markets have risen today, on speculation that the Federal Reserve will resist the pressure to hike interest rates today.
Angus Nicholson, of IG’s Melbourne office, explains:Angus Nicholson, of IG’s Melbourne office, explains:
Asian markets are doing well today in cautious positioning ahead of the Fed rates decision, with currency moves in particular reflecting the general feeling that rates will be left unchanged.Asian markets are doing well today in cautious positioning ahead of the Fed rates decision, with currency moves in particular reflecting the general feeling that rates will be left unchanged.
The Korean Won, one of the most sold currencies in Asia, is having an impressive day, rising 0.6% against the US dollar.The Korean Won, one of the most sold currencies in Asia, is having an impressive day, rising 0.6% against the US dollar.
Japan’s main stock index, the Nikkei, has closed 260 points higher at 18,432,Japan’s main stock index, the Nikkei, has closed 260 points higher at 18,432,
Nikkei ends up 1.4% at 18432.27 and Yen weakens vs Dollar ahead of the most important #Fed decision in decades. pic.twitter.com/XmqncuXPDjNikkei ends up 1.4% at 18432.27 and Yen weakens vs Dollar ahead of the most important #Fed decision in decades. pic.twitter.com/XmqncuXPDj
7.45am BST07:457.45am BST07:45
Introduction: It's Federal Reserve decision dayIntroduction: It's Federal Reserve decision day
Good morning.Good morning.
It’s a historic day. Or rather, it might be.It’s a historic day. Or rather, it might be.
For the first time since the financial crisis began eight years ago, there’s a genuine chance that America’s central bank will take the plunge and raise interest rates today.For the first time since the financial crisis began eight years ago, there’s a genuine chance that America’s central bank will take the plunge and raise interest rates today.
The Federal Reserve’s policy-making committee has an unenviably tricky task at today’s meeting. Is the US economy strong enough to handle the first step towards more normal monetary policy? Or should they leave rates unchanged for yet another month, and repeat the suspense in October?The Federal Reserve’s policy-making committee has an unenviably tricky task at today’s meeting. Is the US economy strong enough to handle the first step towards more normal monetary policy? Or should they leave rates unchanged for yet another month, and repeat the suspense in October?
We find out in almost 12 hours time -- at 7pm BST, or 2pm East Coast time.We find out in almost 12 hours time -- at 7pm BST, or 2pm East Coast time.
And investors across Europe’s and Asia’s financial markets are talking about little else.And investors across Europe’s and Asia’s financial markets are talking about little else.
Borrowing costs have been pegged at their current record low of zero to 0.25% since December 2008. Rates haven’t actually been raised since June 2006, so this really is a moment.Borrowing costs have been pegged at their current record low of zero to 0.25% since December 2008. Rates haven’t actually been raised since June 2006, so this really is a moment.
Fed day. Exciting.Fed day. Exciting.
Hawks on the committee can point to the US unemployment rate; now just 5.1%, the lowest since March 2008.Hawks on the committee can point to the US unemployment rate; now just 5.1%, the lowest since March 2008.
But Doves can play the (low) inflation card -- prices actually fell by 0.2% month-on-month in August, suggesting little need to hike borrowing costs.But Doves can play the (low) inflation card -- prices actually fell by 0.2% month-on-month in August, suggesting little need to hike borrowing costs.
Then there’s the impact that a hike will have on the rest of the global economy. Higher US interest rates will drag capital out of emerging market economies which are already struggling to cope with weakening currencies.Then there’s the impact that a hike will have on the rest of the global economy. Higher US interest rates will drag capital out of emerging market economies which are already struggling to cope with weakening currencies.
How emerging market economies will be waiting on the #Fed rate decision later on in the day pic.twitter.com/GI3HA4Q2siHow emerging market economies will be waiting on the #Fed rate decision later on in the day pic.twitter.com/GI3HA4Q2si
Plus there’s the issue of China’s slowdown, which could deliver a shock to the American economy in the months ahead.Plus there’s the issue of China’s slowdown, which could deliver a shock to the American economy in the months ahead.
The Fed will be desperate to avoid losing credibility by raising rates now, only to cut them if the economy turns south in 2016. But equally, there’s a danger of missing the moment, and having to hike more aggressively next year.The Fed will be desperate to avoid losing credibility by raising rates now, only to cut them if the economy turns south in 2016. But equally, there’s a danger of missing the moment, and having to hike more aggressively next year.
A tough decision, which is why no-one really knows what’s going to happen.A tough decision, which is why no-one really knows what’s going to happen.
Former Dallas Fed President Richard Fisher, on CNBC: "I think they’ll actually, for the first time in a long time, decide this at the table"Former Dallas Fed President Richard Fisher, on CNBC: "I think they’ll actually, for the first time in a long time, decide this at the table"
We’ll be tracking all the build-up to the big decision through the day....We’ll be tracking all the build-up to the big decision through the day....
Updated at 8.10am BSTUpdated at 8.10am BST