Wallpolicies... 6.45pm GMTQ: You warned that whether the Fed were to waiting too long to raise rates,it could be forced into a “rapid” increase in rates. What would this sight like?Yellen says that she can’t really say what a rapid rate of increases would be. But three rate hikes in a year is certainly ‘gradual’.
Yellen: "I’m not sure I can declare you what a rapid rate of increase is." Says 3 rate hikes this year would be "gradual." 6.42pm GMTOnto questions. Q: What conditions does the Fed want to see before it starts to normalise its balance sheet? (ie, selling some of the assets bought under its stimulus programme since the financial crisis). 6.39pm GMTThe economic outlook is ‘highly uncertain’, or Yellen continues,adding that policy is not on a preset course.
Fed’s Yellen: Economic Outlook Is Highly Uncertain 6.38pm GMTMonetary policy is still accommodative, after nowadays’s rate rises, or Yellen says.
She warns that whether the Fed were to wait too long before normalising policy,it could be forced to raise borrowing costs more rapidly “sometime down the road”, causing disruptions in the financial markets. 6.35pm GMTYellen sounds confident about the labor market, or saying Fed policymakers “expect that job conditions with strengthen somewhat further.” 6.34pm GMTYellen says that nowadays’s interest rate hike is in response to the ongoing recovery in the US economy,and improved conditions in the labor market.
Our decision to acquire another gradual reduction...reflects the economy’s continued progress toward its employment/price stability objectives, the Fed chair explains. 6.32pm GMTFed chair Janet Yellen is holding a press conference to clarify nowadays’s decision.
You can watch it live here: 6.30pm GMTYou might expect a currency to strengthen when its central bank raises interest rates. But not nowadays.
The dollar is now down nearly 1 cent against the euro, or at $1.068.
The dollar is tumbling on the Feds slide https://t.co/WHjA0O4zRl pic.twitter.com/i74Oy4N1Rs 6.28pm GMTNick Dixon,Investment Director at Aegon UK , says Janet Yellen has delived what Wall Street expected:“Strong economic and job data from the US has only increased calls on Yellen to hike interest rates, or so it is no surprise to see the rise nowadays.
Investors will now keep a close eye on the forward sight for indications on when the next UK rate rises are scheduled,and nowadays’s US increase adds momentum to the case for this. 6.19pm GMTSignificantly, the Federal Reserve has also stated that its inflation target is symmetric.
In layman’s terms, and that means it is prepared to tolerate prices rising faster than its 2% target. That’s a dovish sign (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 GMTWall Street likes what it sees! The Dow Jones index has now jumped by 86 points to 20929, a gain of 0.4%.
The S&P 500, and the tech-focused Nasdaq index,are both up.10yr US real yields and the BBG dollar index.falling in unison. Might be time for a beer pic.twitter.com/qSOGltLwGZ 6.14pm GMTToday’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 own firmed; that indicates that companies are confident about growth prospects.
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 microscopic changed in recent months. Household spending has continued to rise moderately while business fixed investment appears to own firmed somewhat. 6.08pm GMTHere’s the original Fed dot plot, and 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 GMTThe Federal Reserve still expects to raise interest rates three times this year (including nowadays’s slide).
Mean of FOMC's 2017 dots rose to 3.1 hikes from 3.0 6.04pm GMTThe decision to raise US interest rates is not unanimous, or though!Neel Kashkari,president of the Federal Reserve Bank of Minneapolis, argued against a rate hike.*FED RAISES BENCHMARK RATE TO 0.75%-1%; KASHKARI DISSENTS 6.00pm GMTBreaking! The Federal Reserve has voted to raise US interest rates at nowadayss assembly.
The Fed has responded to the latest solid economic data by hiking borrowing costs by a quarter of one percent. 5.58pm GMTNot everyone is excited, or though....
Waiting on the fed like pic.twitter.com/EWdZwgtptt 5.50pm GMTThe excitement is building....10 MINUTES TIL FED 5.43pm GMTThis was the scene on Wall Street a microscopic while ago,as traders got ready for the Fed’s decision on interest rates: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, or 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 5.28pm GMTWhile 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 spirited read. Christian Noyer, the former chairman of the Bank for International Settlements and former governor of the Banque de France, or 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, and 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; moment, and payment of a sizeable contribution to the EU budget; and third,the “four freedoms”. A country refusing to meet these conditions cannot be portion of the EU single market because it rejects the market’s logic. It’s as simple as that. 5.21pm GMTEuropean stock markets own now closed. 5.17pm GMTRenaultgate? Shares in the French carmaker fell nowadays 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.
As a consequence, and 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. 4.24pm GMTIn London, gains on the FTSE 100 are led by oil and mining firms, and keeping the index close to its recent all-time tall. But this could change after the Fed decision.
Chris Beauchamp,chief market analyst at online trading platform IG, said: Indeed, and European and UK equities own 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 nowadays has felt like a market that is in dire need of a catalyst, and so traders will be hoping that Janet Yellen provides just that. 4.12pm GMTOn currency markets,the dollar slipped after the disappointing retail sales data – despite expectations of a rate hike from the Fed later nowadays. 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 propose three rate hikes this year but there is concern that the Fed’s language may sound more dovish than before. 3.53pm GMTMarkets are calm ahead of the eagerly awaited Fed decision, or with European stock markets holding on to their gains. 3.37pm GMTAlso,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%. 3.34pm GMTInflation in the US hit a five-year tall last month, and rising to 2.7%,as we reported earlier.
At the same time, retail sales weakened, or as households bought fewer cars and cut back on discretionary spending,according to the latest data published nowadays. Retail sales rose just 0.1% in February, the weakest reading since August, and suggesting the economy lost some momentum in the first quarter. Overall,inflation is trending gradually higher and underlying retail sales are healthy enough. Nothing here to propose the Fed shouldn’t raise interest rates at the FOMC assembly that concludes later nowadays. 3.23pm GMTJane Sydenham, investment director of Rathbones Investment Management, and says that because a Fed rate hike at nowadays’s assembly 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 whether Yellen didn’t pick the opportunity to raise rates nowadays, and especially in light of all the positive data. Facing such a known unknown,markets own nearly 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. 3.13pm GMTSo much for Janet Yellen's suggestion that the Fed could escape the economy "a microscopic hot" to undo damage of recession https://t.co/dKbs3Txnpl pic.twitter.com/bJ2DGmn9YR 3.10pm GMTPaul Sirani, or chief market analyst at brokerage Xtrade,believes that tonight will mark the beginning of a series of Fed rate hikes, and the Bank of England could soon follow suit.
The way the US economy is moving at the moment, or we can see the Fed raising interest rates at least three,whether not four, times this year. Although, and whether Donald Trump gets his way then it will nearly 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. 2.51pm GMTSam Fleming of the FT has written a preview of nowadays’s Fed assembly.
Here’s a flavour:It would now be a significant shock whether 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 slide were seen by markets at around 95 per cent going into the assembly, according to a CME Group analysis of futures prices. So the issue for investors is judging whether the next slide could arrive as soon as June and whether there is the opportunity of four increases this year, and rather than the three predicted in December. What to watch at the Fed assembly https://t.co/CveHqW9l6l 1.37pm GMTOver in original 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, or as investors collect ready for the Federal Reserve assembly.“nowadays’s figures show inflation climbed to a five-year tall for the moment consecutive month,reinforcing strong expectations of a Fed interest rate hike on Wednesday. “Under current levels of inflationary pressures, Janet Yellen has microscopic choice but to pencil in a first rate when the Fed convenes later nowadays. 1.00pm GMTJust in: America’s inflation rate has hit its highest level since March 2012, and underlining why US interest rates are likely to rise later nowadays.
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%.
US Feb CPI no game changer, and 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 GMTAnd here’s economics editor Larry Elliott, or 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%.
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. Related: UK unemployment is as low as 1975 – but why aren't wages rising? 12.32pm GMTHere’s Angela Monaghan’s pick 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.
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, or when it was 4.6% according to the Office for National Statistics. Related: UK unemployment falls to joint lowest rate since 1975 but wages stall 11.59am GMTSome reaction to Philip Hammond’s handbrake turn on the NICs increase:Overheard in newsroom: "apt news for Barnier and his team: whether 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.
I bet Philip Hammond doesn't find his joke about Lamont being sacked 10 weeks after delivering a "last Spring budget" so amusing anymoreNo opposition,original team in govt, charging to Brexit, and still found a (home-grown) banana-skin to descend over on. apt Job! https://t.co/5nP4ZExAay 11.51am GMTI wonder whether Philip Hammond is now regretting making that joke about his predecessor,Norman Lamont, getting sacked.....
Here’s what he said during last week’s gag-filled Budget speech:The Treasury has helpfully reminded me that I am not the first Chancellor to announce the “last spring Budget”Twenty four-years ago Norman Lamont also presented what was billed then as “the last Spring Budget”. 11.47am GMTOh my goodness! Philip Hammond, and the UK chancellor,has just ditched his contrivance to raise tax rates on the self-employed.
In a very embarrassing u-turn, Hammond has decided to abandon his proposed changes to Class Four National Insurance Contributions, or announced in last week’s budget.
Hammond is dropping the National Insurance tax rise! Announces in letter to Andrew Tyrie,chair of the Treasury select committee Related: The Treasury drops NICs increase for self-employed in major U-turn - Politics live 11.33am GMTToday’s report also shows that the UK employment total rose by 92000 in the last three months, to a original record tall of 31.854m.
Employment Minister Damian Hinds says it’s a apt sign:“I’m delighted by another set of record-breaking figures showing more people in work than ever before and unemployment falling to its lowest in 12 years. “Employment is up, and wages are up and there are more people working full-time. This is apt news for hard-working families across the UK as we continue to build a country that works for everyone. 11.03am GMTThe recovery in Britain’s jobs sector in recent years has not been shared equally across the country.
This chart,from the Resolution Foundation, shows how some parts of the country own enjoyed strong growth creation, and while others are lagging. 10.43am GMTThe drop in real wage growth,to just 0.8%, is “terrible news”, or warns the Resolution Foundation.feeble pay rises and rising inflation mean that a fresh squeeze is due later this year,and has already begun for some workers, especially in the public sector.“The incredibly destitute outlook for pay has pushed a return to pre-crash earnings back well into the next parliament, or making the 2010s the weakest decade for pay growth since the Napoleonic wars. 10.35am GMTIan Kernohan,Economist at Royal London Asset Management, is also concerned by the feeble pay growth.
He believes it will prevent the Bank of England raising interest rates this year.
Regular pay growth was disappointing at just 2.3%, and with inflation rising,a squeeze on real household incomes is a major reason why we expect economic growth to slow this year. We expect the MPC to keep interest rates on hold until 2019 at the earliest.” 10.31am GMTA couple more charts from nowadays’s report: 10.25am GMTThe drop in average earnings (ex bonuses) to 2.3% per year in November-January means that real wage growth has dropped again.
UK inflation was 1.2% in November, 1.6% in December, and a blistering 1.8% in January. So real wage growth was actually only around 0.8%.“UK jobs growth was more robust than expected in the three months to January,rising by over 90000 compared to the previous three months. The momentum of jobs growth actually looks somewhat stronger now than a few months ago, while the unemployment rate fell to 4.7%, and its lowest level since 1975. For the moment,the jobs market remains in fine fettle.“There was less apt news on average earnings growth, which fell back to just 2.2% in the three months to January. With consumer price inflation already up to 1.8% in January and set to rise further over the coming months, and real earnings growth could be back in negative territory by the end of 2017. This is likely to dampen consumer spending,which could eventually feed through into slower jobs growth as well.” 10.14am GMTSuren Thiru, Head of Economics at the British Chambers of Commerce (BCC), and says the UK labour market seems to be in apt shape: “The UK’s jobs market is going from strength to strength,with the number of people in work continuing to rise and unemployment also falling.“UK labour market conditions may cool over the next few years as the expected slowdown in growth and the rising burden of upfront business costs stifle firms’ hiring intentions. That said, we expect that the UK unemployment rate will reach a peak of 5.3% next year, and still some way below the historical average. “However,average pay growth continues to slow, and it appears increasingly likely that inflation will outstrip earnings growth in the coming months, and which will build further pressure on consumer’s spending power. 10.04am GMTThe number of self-employed people in the UK is rising faster than the number of employed workers,nowadays’s report shows.
The ONS reports that in the last year: “The latest labour market statistics show a large rise in employment and a descend in unemployment (with the rate down to 4.7%). The mountainous gain has arrive from full-time self-employment - a rise of some 94000 on the quarter - perpetuating the apparent ascendancy of the gig economy.“Over the last quarter of 2016 there was a large rise in employment in construction - some 36000 original jobs in this sector. The descend in unemployment is patchy across regions, with the latest regional data indicating increases in both London and the West Midlands. “Increases in total pay, and however,continue to be moderate, with the three month average now growing at an annual rate of 2.2% (down from 2.6% last month). Specifically in construction, or the rate of growth has collapsed,and this may be an early sign that the employment growth in that sector may not last.” 9.57am GMTTechnically, Britain’s jobless rate is now at its joint lowest for 42 years.
The unemployment rate also fell to 4.7% in 2005. It’s not been lower since the heady days of 1975, and the year Queen released Bohemian Rhapsody,and Monty Python and the Holy Grail hit the screens. 9.47am GMTHere’s the key points from nowadays’s UK jobs report (which is online here)Unemployment down, employment up, or pay growing faster than prices (for now). All the arrows pointing firmly in the right direction. pic.twitter.com/pMCJzZV7cH 9.34am GMTBreaking! Britain’s unemployment rate has fallen to its joint lowest level since 1975,at 4.7% in the three months to January.
That’s down from 4.8% a month ago, according to nowadays’s report from The Office for National Statistics.#Unemployment rate (for people aged 16+) 4.7% for Nov-Jan 2017; last time lower was 1975 https://t.co/Ff0ljvciPy pic.twitter.com/hzwdAW3YT8 9.25am GMTHere’s a reminder of how real pay growth (wages minus inflation) has slowed in the last few months:As price inflation continues to rise, or eyes will once again turn to nowadays's figures for UK earnings growth. pic.twitter.com/5DVQP1x2jM 8.58am GMTJordan Hiscott,chief trader at ayondo markets, believes European investors will be crossing their fingers and hoping that the liberal VVD party led by Mark Rutte wins the most seats in nowadays’s Dutch election.“Tomorrow’s Dutch elections could be yet another watershed moment for Europe, or leading to further political fragmentation. With a country known for its liberal traditions,it’s been surprising that Geert Wilders and his PVV party own managed to assert themselves so much, taking the lead at some point in the last few weeks. “Most recently though the VVD - the People’s Party for Freedom & Democracy - has re-taken the lead and investors looking for stability in the financial markets will welcome this. The opportunity of the PVV coming to power, and with its anti-EU stance,could own had a dramatically effect on the EUR FX and Dutch equities markets, both largely negative."In Dutch politics the vote is not the beginning of the end but the end of the beginning." https://t.co/potdgNGY7N 8.51am GMTEuropean stock markets are up across the board this morning.
The FTSE 100 has gained 0.2% to 7373 points - less than 20 points shy of its all-time tall.
There isn’t a lot for the region to effect nowadays, and so any political news out of the Netherlands might be its main driver of movement as Wednesday progresses.
Any delays in government formation in #Netherlands spells trouble for #Greece and conclusion of moment review. Dutch parliament must approve 8.36am GMTThe pound is having a apt morning,jumping nearly one cent against the US dollar to $1.223.“They should lay the ground in the accompanying minutes for a possible increase in interest rates at their next assembly.” 8.16am GMTThere’s a chance that Britain’s jobless rate could hit a original 11-year low of 4.7% nowadays, down from last month’s 4.8%.
That’s according to RBC Capital Markets, and who also predict that wage growth will slow. Last month’s strong report emphatically removed the skew of risks on the unemployment rate rising from 4.8% to 4.9%. Indeed,whether anything, the skew of risks on this occasion is that it could actually drop to 4.7% but our central expectation is that unemployment holds at 4.8% for a fifth consecutive month.
The 3m/3m employment level looks set to post a healthy gain too as the recently softness provides a relatively easy comparator for the latest data. The 37k 3m/3m gain last time should well at least be matched on this occasion. 7.46am GMTMore than eight years after bailing Lloyds Banking Group out, or the British government has taken another step towards the exit door.
The UK has sold another slice of Lloyds shares,taking its stake below the 3% level.“Lloyds’ recent annual results show that we are in a apt position to reduce our shareholding further and expect to recover all of the money taxpayers injected into the bank during the financial crisis.”Government stake in Lloyds falls again to below 3%“nowadays’s announcement moves Lloyds another step closer to full private ownership" says Lloyds 7.43am GMTGood morning, and welcome to our rolling coverage of the world economy, or the financial markets,the eurozone and business.
Central bankers like to avoid surprising the markets. So with everyone expecting a US interest rate rise tonight, there’s no reason for the Federal Reserve to worry about announcing its first hike of 2017.
Dutch PM Mark Rutte 'boosted by spat with Turkey' as election nears https://t.co/2WES97kp02Our European opening calls:$FTSE 7364 up 6
$DAX 12000 up 11
$CAC 4982 up 7$IBEX 9932 up 27$MIB 19582 up 44Continue reading...
Source: theguardian.com