America’s central bank announces it will not raise borrowing costs for the first time since the financial crisis began
Latest: Janet Yellen’s press conference underway
FOMC leaves rates at record low
Economists look to December
Dear Fed: stop waiting for the ‘perfect’ time to raise rates and just do it
Introduction: Big day for the Fed
8.21pm BST
Yellen says that statements of the Federal Open Market Committee members have been parsed for clues as to what the Fed is planning.
It is an “unfortunate state of affairs”, she says.
8.19pm BST
Here is a look at what happened to the S&P 500 today when the Fed announced its decision:
A rough ride, but stocks like the Fed decision. http://t.co/8Za8i1PtiT pic.twitter.com/3I9WCnyyp3
8.16pm BST
Yellen says that slowing in China’s economy has long been expected and that “there are no surprises there”.
“Developments we saw in financial markets in August partly reflected concerns of downside risk to Chinese economic performance and the deftness with which policymakers are addressing those concerns,” says Yellen.
Fed Yellen: "The Fed should not be responding to the ups and downs of the markets."
7.57pm BST
“We expect inflation to move back to 2%,” says Yellen. Energy prices have created a drag on inflation, but she views it as transitory.
“In the meantime, the labor market has continued to improve” and is moving closer to full employment which creates upward pressure on inflation, says Yellen.
7.50pm BST
Yellen says that October remains a possibility for interest rate hike, despite that month’s meeting currently being scheduled with no press briefing.
Every meeting is a meeting where the committee can make a decision, says Yellen. She adds that if the Fed were to raise interest rates in October, it would than call a press briefing.
Oooh. We'll get a bonus briefing if the Fed raises rates without a presser following.
7.43pm BST
“The situation abroad bears watching,” Yellen says before noting that economic recovery at home has advance at a sufficient rate than an argument could be made for raising interest rates. “The economy has been performing well and we expect it to do so.”
She says that the decision to raise rates will not be based on any specific data.
Key comments from Janet Yellen: 1. "The situation abroad bears close watching." 2. But "Not fundamentally altered our outlook." #stocks #Fed
7.38pm BST
The monthly jobs report just got even more important. Yellen has just clearly pegged any rate rise to further improvements in the labor market.
“When it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term.”
7.38pm BST
Federal Reserve Chair Janet Yellen is prompt, starting the conference at 2:30 pm.
You can watch it here:
LIVE NOW: Press conference with #FOMC Chair Janet #Yellen: http://t.co/v8ZMdutyPL
7.32pm BST
For a moment there, the markets stumbled but are now right back up.
The market's reaction so far to the Fed pic.twitter.com/x053OQivXD
Ahead of Yellen: Dow, S&P, Nasdaq in the green » http://t.co/V7UtyBB65a pic.twitter.com/KOPmlR30sD
7.26pm BST
Fed Up campaign, which has spent the last month lobbying the Fed to not raise the interest rates just yet, is definitely happy with today’s decision.
Here is a statement from Ady Barkan, campaign director for Fed Up:
This is a victory for the working families who stepped up with innovative organizing to send the Fed a clear message: Our voices belong in the debate about our economy. With the recovery still far too weak in too many communities, it would have been economically devastating – and immoral – to slow the economy.
We applaud Chair Yellen and the Federal Reserve for resisting the pressure being put on them to intentionally slow down the economy. Weak wage growth proves that the labor market is still very far from full employment. And with inflation still below the Fed’s already low target, there is simply no reason to raise interest rates anytime soon. Across America, working families know that the economy still has not recovered. We hope that the Fed continues to look at the data and refrain from any rate hikes until we reach genuine full employment for all, particularly for the Black and Latino communities who are being left behind in this so-called recovery.
Related: American wages remain at 1997 levels as recovery fails to lift middle class
7.18pm BST
Chris Williamson, chief economist at Markit, writes that today’s decision is “merely a temporary forestalling of the inevitable” and that the speculations will now shift to December.
The decision will be seen by many as appropriate. Although the domestic economy appears to be in sound health, current worries about slowing growth outside of the US, notably China, and recent financial market turmoil meant the Fed decided on balance that it’s not a good time for the first US rate hike in almost a decade. But the lack of action leaves lingering uncertainty about the outlook for US policymaking, which will no doubt fuel further volatility in the markets.
Looks like the Fed thinks natural unemployment is somewhere around 4.8 to 4.9 percent now pic.twitter.com/jXcaLZ3GxA
The Fed wants -"some further improvement in the labor market " -to be "reasonably confident" inflation will reach 2% pic.twitter.com/nrYmZGM0Jh
7.08pm BST
Here is AP’s quick-analysis of the Fed’s decision:
The Federal Reserve is keeping interest rates at historic lows for at least another month.
Pressure had been building as to when the US central bank would hike rates from near-zero after Fed Chair Janet Yellen said in congressional testimony that it would likely be later this year. But Fed officials held off Thursday after a two-day meeting because inflation is running well below their 2% objective and “recent global economic and financial developments may restrain economic activity somewhat.”
7.02pm BST
Here is an excerpt from the statement:
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 % target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2% inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
6.54pm BST
The consensus on Financial Twitter seems to be that Fed will hold ...
If the #Fed doesn't want to tighten, it could cite Labor Force Participation. http://t.co/3hei4NAPKa #RawDoc pic.twitter.com/h6Zw2OCXul
Larry Summers: This is not the time for a tightening in monetary policy http://t.co/E5JcWIWJ36 #Fed pic.twitter.com/bM77cykO6h
Wow, the 2-year Treasury yield thinks the Fed's gonna hold. pic.twitter.com/OXqsJO6VAl
6.47pm BST
With a little over ten minutes to go till Federal Reserve announces whether it will or will not raise rates, there has been little reaction from the US markets.
Here is a quick rundown of what else has happened so far:
WATCH LIVE TODAY: Press conference with #FOMC Chair #Yellen at 2:30 p.m. ET: http://t.co/v8ZMdutyPL
6.30pm BST
Here is a quick look where the markets stand right now:
Markets are pricing in roughly a one-in-four chance the Fed will lift interest rates today: http://t.co/R3ukfX6abd pic.twitter.com/yrwbNb9CCH
6.20pm BST
There are about 40 minutes left till the big reveal.
It seems that some people are experiencing a bout of Bernanke melancholy. (Ben Bernanke was Yellen’s predecessor.)
We wouldn’t have this uncertainty. We wouldn’t be frozen. The Yellen Fed is just a bunch of people, a cacophony of voices and maybe she reaches some conclusion.
I think a black box Fed we’ve been talking about it really bad for both corporate America and for, yes, financial America, for stocks. And that’s worrisome.
5.52pm BST
Zuccotti is not the only place that is seeing some action today - some protesters have also gone to the Fed. They have been spotted holding signs calling for good jobs and full employment.
In August, the US unemployment rate dropped to 5.1%, which according to some Fed officials means that the labor market is approaching full employment.
We don’t have the tools to be able to address the structure of unemployment across groups, but a stronger economy generally really does tend to be beneficial to all Americans and that’s what we are working towards.
Protesters outside the Fed meeting. What the Fed decides at 2pm today will have real impacts on people. pic.twitter.com/kHrDJq6el3
5.48pm BST
Here is another reminder of how long it’s been since the Fed last raised interest rates in 2006:
The last time the #Fed raised rates, "Crash" won best picture, Shakira's "Hips Don't Lie" was #1 that week, and there was no #iPhone.
5.45pm BST
Today, 17 September, also marks four years since Occupy Wall Street took over Zuccotti Park in New York. Back in 2011, the movement tried to draw attention to issues like financial inequality, government spending, healthcare costs and the problem of student debt.
To mark their 4th anniversary, some of the activists are returning to Zuccotti today for another day of action.
Today is 4th anniv. of Occupy Wall Street in NYC's Zuccotti Park. Not many ppl out. These two grabbing attention. pic.twitter.com/QP2LgmYzA3
Related: Former Occupy Wall Street protesters rally around Bernie Sanders campaign
Related: Occupy Wall Street: four years later
5.13pm BST
My colleague Suzanne McGee had a piece of advice for the Fed this morning: raise the rates already.
[T]he truth may be that there’s no such thing as the perfect time for the Fed to act, but that the more policymakers stall, the more other, less evident dangers will become more significant. At some point the Fed must step in and raise rates – unless it chooses to simply abdicate this role altogether – and delaying the inevitable may actually create more risk than taking that first small step.
Related: Dear Federal Reserve: stop waiting for the 'perfect' time to raise rates and just do it
5.00pm BST
Hello, Jana here, coming at you live from New York, where some traders are apparently passing around Yellen’s horoscope.
Yellen, whose birthday is in August, is a Leo.
Inbox: Traders are passing around Janet Yellen's horoscope. From Andy Brenner at National Alliance (h/t @kristinapet) pic.twitter.com/fUE6kFvuWu
4.59pm BST
There are just two hours to go until the most eagerly anticipated Federal Reserve interest rate decision in many a year, so I’m handing over to Jana Kasperkevic in New York. Goodbye from London, and enjoy the show..... GW
4.58pm BST
You can get up to speed on tonight’s FOMC meeting with our comprehensive Q&A, by Katie Allen:
Related: US interest rates Q&A: what will the Federal Reserve do?
4.54pm BST
Another reminder of how much has changed since the Federal Reserve last raised rates.
Today's young bankers are studying up, because they’ve never seen a Fed rate hike before. http://t.co/lhrCCsn1Cy pic.twitter.com/23p7Z8Pqqw
4.48pm BST
After a anxious day, Europe’s stock markets have just closed. Now traders must simply wait for the FOMC decision.
The FTSE 100 index (the largest blue-chip companies listed in London) fell by 42 points, or 0.7%, to extend its recent zig-zag pattern:
4.36pm BST
Central bankers such as Janet Yellen have put lots of effort into reassuring the markets that the first rate hike isn’t a huge event.
The most important thing is the future path of borrowing costs, not exactly when the first rise comes, they argue.
This is not because we expect tighter monetary policy to drive credit spreads a lot higher – again, this has not tended to happen in the past.
Rather it is largely because we think that the Fed will raise the federal funds rate faster and further than discounted in the Treasury market over the next year or two.
4.16pm BST
A rate hike, when it comes, is going to be a new experience for millions of financial workers worldwide.
Anyone who got their first job on Wall Street since 2009 (or in the City of London, Frankfurt, Tokyo or Shanghai for that matter) has only ever known record low interest rates.
ICYMI: if the Fed hikes rates today, 1/3rd of traders will be trading it for the first time http://t.co/v4FizrZLvK pic.twitter.com/yv9PS0uHfU
4.00pm BST
Three hours to go until the Fed announces its decision.
Janet Yellen will then hold a press conference, 30 minutes later (at 2.30pm EDT or 7.30am BST).
WATCH LIVE TODAY: Press conference with #FOMC Chair #Yellen at 2:30 p.m. ET: http://t.co/v8ZMdutyPL
3.50pm BST
The International Monetary Fund’s chief spokesman, Gerry Rice, has declined to comment on tonight’s decision.
3.35pm BST
The Washington Post’s Ylan Q. Mui reminds us how much has changed since 2006, the last time US interest rates were raised.
Last time Fed hiked, "the iPhone didn’t exist, Peyton Manning had never played in a Super Bowl and Nintendo first released the Wii." @WSJ
3.11pm BST
On the other hand, the Philly Fed is just one more data point....
Yes, #financetwitter, after months of data interpretation, the Fed just abruptly would cancel its plans to hike based on Philly Fed.
3.10pm BST
The Philadelphia Federal Reserve has JUST delivered a blow to hopes of a rate hike today.
The Philadelphia Fed’s monthly manufacturing index, which tracks conditions in the region, has fallen short of forecasts, dropping to minus 6.0 from plus 8.3.
BREAKING: Philly Fed index comes in at -6.0 (Sept.) vs. 8.3 (Aug.)
Philly Fed misses sharply to the downside signaling more negative feedback into the economy from financial market turbulence.
Kiss your rate hike goodbye if u havent already
Philly Fled..
3.00pm BST
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 BST
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 BST
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 BST
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.
2.19pm BST
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.
2.13pm BST
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.
“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.”
The Fed won't raise rates now, David Rubenstein says. Here's why » http://t.co/4P5oPWc8NZ pic.twitter.com/fHpBEuldsY
1.57pm BST
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.
Housing starts slip 3.0% in August after weaker July http://t.co/cX293ABsF3
1.36pm BST
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.
1.33pm BST
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/5DV8Y2Mez6
"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/fHeXCmWfX0
"The market has 'tightened' for the Fed already." Hold fire, says CRT. http://t.co/w5PuaqjPUe #chartsforJanet pic.twitter.com/ImQ3aE48n5
1.20pm BST
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:
“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.”
12.57pm BST
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.
12.55pm BST
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 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.
12.36pm BST
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.
Great resource here on the Fed's highly anticipated decision: http://t.co/3nrBFtQi12 @BloombergBrief #FOMC #Fed pic.twitter.com/XDQa3vMQSp
12.11pm BST
Once the Federal Reserve meeting is over tonight, the financial markets can return to fretting about Greece.
“As long as you abstain others make plans against you.”
After Fed uncertainty put to bed this evening, thank goodness for weekend equally-difficult-to-call Greek election result to keep us amused
11.45am BST
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/uor5Aa5qUn
11.26am BST
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/t4hrTWuFMs
11.15am BST
Just 32%. That’s the market-implied probability that America gets its first interest rate rise since 2006 today.
10.50am BST
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 BST
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:
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 BST
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.
FX markets relatively subdued ahead of #FOMC. #Dollar selling off slightly since the European open. TM pic.twitter.com/6MlPZRPosB
10.21am BST
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.
Countries most at risk from US rate hike are Brazil, Russia, Turkey, South Africa, which have "severe domestic challenges" - Moody's
10.13am BST
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 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 BST
We already have one central bank decision, and it’s a no change.
9.33am BST
After 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 BST
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.
9.01am BST
Tonights #FOMC decision, latest polls: #Bloomberg: 30% chance of a rate hike #FT: 47% chance of a rate hike #Fed #USD
8.49am BST
Around half of the top economists in the City and on Wall Street will feel pretty smug when the Fed decision is announced.
“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.”
8.36am BST
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.
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.
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.
8.30am BST
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):
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.
8.29am BST
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.
Morning 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 BST
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.
8.03am BST
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:
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.
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/XmqncuXPDj
7.45am BST
Good morning.
Fed day. Exciting.
How emerging market economies will be waiting on the #Fed rate decision later on in the day pic.twitter.com/GI3HA4Q2si
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"
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