US Federal Reserve raises rates - as it happened

Policymakers at the US central bank raise interest rates for the third time this year, to 2.25%

• UK budget to be held on 29 October, Hammond announces
• AA blames profit plunge on UK 'pothole epidemic'
• UK mortgage approvals fall in August
• CBI: High street sales growth slows

8.33pm BST

That's all for today. Thank you for following the blog and for all your comments. Please join us again tomorrow. AM

8.31pm BST

With the press conference over, Anna Stupnytska, global economist at Fidelity International, says Powell struck a more doveish tone than expected:

The US Federal Reserve hiked rates at the September meeting, as widely expected. The overall tone of the statement was upbeat, although Chairman Powell chose to strike a relatively dovish tone at the press conference, presumably making room for more flexibility around the future policy path given the multitude of uncertainties.

8.28pm BST

Read Chairman Powell's opening statement from the #FOMC press conference (PDF): https://t.co/iftM7Bdusx

7.52pm BST

"It's hard to see much happening at this point", Powell says, when asked about the impact of trade tensions between the US and China.

He says there are areas of concern however: loss of business confidence, which doesn't appear to gave materialised yet, and financial market reaction over the longer term.

7.46pm BST

Powell says the Fed is constantly weighing up the risk between moving too quickly to raise rates and therefore snuffing out the recovery, and moving too slowly, therefore allowing the economy to overheat.

That's why the central bank is moving gradually, he says.

7.36pm BST

Jerome Powell, chairman of the Federal Reserve is giving a press conference. He begins by outlining the strength of the US economy.

He says the financial system is now stronger and better placed to deal with a shock than it was pre-crisis.

7.25pm BST

David Herrick, chief executive of Moneycorp's US business, says the markets had priced in today's rate hike:

The dollar and wider financial markets have had a muted reaction to today's second straight quarter of dollar-supportive rate rises from the Fed.

The market outlook is for these to continue through the final quarter of this year and into 2019 as the economy strengthens.

7.19pm BST

Reaction to the Fed decision by Kully Samra, UK Managing Director of Charles Schwab:

This hike follows strong GDP figures for the first half of the year and yet again demonstrates the Fed's faith that it can continue to raise rates gradually without slowing economic growth.

Trade concerns are being counter-balanced by wage inflation, with average hourly earnings rising 2.9% year-over-year as of August. These numbers were welcomed in the latest jobs report and crucially do not suggest over-heating, meaning the Fed has little need to crimp economic growth.

7.16pm BST

Dollar drops, stocks move higher after the Fed hikes https://t.co/SraUo4rJXp pic.twitter.com/Cw2lMhKOM2

7.12pm BST

Here is what the Fed policymakers had to say:

Information received since the Federal Open Market Committee met in August indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low.

Household spending and business fixed investment have grown strongly. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.

7.09pm BST

The Fed has removed the key term "accommodative policy" from its accompanying statement, signalling more rate hikes to come.

The central bank's dot plots show 12 of 16 officials favour four rate hikes in 2018, making another US rate rise in December likely.

Fed raises its economic growth outlook for this year and next. Dot plots suggesting 3 more rate hikes next year as well. https://t.co/m6hLixaYZJ

7.03pm BST

The Federal Reserve has raised US interest rates by 0.25 points, to a range of 2-2.25%, as expected.

Federal Open Market Committee statement: https://t.co/M63ecS10I3 #FOMC

6.55pm BST

FOMC in 6 minutes.... pic.twitter.com/fvehrf7loE

5.20pm BST

In other news, the chancellor, Philip Hammond has announced the budget date, which is Monday 29 October.

Budgets traditionally take place on a Wednesday, but the chancellor has selected a data to make sure it does not clash with the final stage of Brexit negotiations in November.

I'm pleased to announce the Budget will take place on 29 October.

I'll set out how our balanced approach is getting debt falling while supporting our vital public services, and how we are building a stronger, more prosperous economy. pic.twitter.com/FKafI3kLO9

4.57pm BST

Expect the Federal Reserve to raise interest rates for the third time this year-and publish forecasts projecting another move in December pic.twitter.com/VbGGARsapU

2.55pm BST

Investors on both sides of the Atlantic await the US Fed decision tonight, but most will be more interested in the Fed's "dot plot", showing where policymakers thinks rates are going in future months.

Neil Wilson at markets.com explains:

The Federal Reserve will raise rates today - that much is certain. There is a roughly 95% chance of the fed funds rate moving up to the 2-2.25% target, which means the decision itself is well baked in to market pricing. This would be the third interest rate rise this year and indicators still point firmly towards a fourth by December.

Therefore, market attention is on a number of other elements contained in both the projections (dots) and the monetary policy statement.

2.34pm BST

US markets edged higher on the opening bell:

2.19pm BST

Carolyn Fairbairn, CBI director-general, says that Labour is thinking up policies that work on paper but not in reality because the party lacks business experience.

Responding to Jeremy Corbyn's closing speech at the Labour Party Conference, Fairburn said:

Much of Labour's vision for a more sustainable and fair country is absolutely right. Business not only supports it but holds many of the keys to making it a reality.

From onshore power to affordable childcare, the Labour leader's speech echoes calls from firms for more action on climate change and to unlock productivity.

Related: Jeremy Corbyn calls for election if MPs vote down May's Brexit deal

1.18pm BST

US futures are higher ahead of tonight's expected Fed rate hike, with bank shares among the gainers.

Shares in JP Morgan, Citigroup, Wells Fargo and Bank of America were all up as policymakers prepare to announce what would be the third US rate rise in 2018.

12.31pm BST

More on the AA, which has blamed a UK "pothole epidemic" caused by the "beast from the east" and low road maintenance spending for a sharp fall in half-year profits.

The roadside assistance service had to deal with 1.91m breakdowns in the six months to July, up 8% from a year earlier. The AA estimates that potholes are costing drivers and their insurers at least 1m a month due to big car repair bills.

We've had a 15-year high in breakdowns, we had the worst winter back to back with the hottest summer, all of which causes everyone to drive their cars and more cars on the road generally means more breakdowns.

Sometimes you have a rubbish winter and sometimes you have a really hot summer but it's rare that you have a rubbish winter back to back with the hottest summer.

12.15pm BST

Oil prices have eased off today, but are still on course for a fifth consecutive quarterly gain as Iran sanctions keep prices at near late 2014 highs.

Brent crude is down 0.3% or 24 cents at $81.63 a barrel, having risen to $82.55 on Tuesday.

11.55am BST

Retail sales growth slowed less than expected in September, according to the CBI's monthly survey of the sector.

Of the retailers surveyed, a balance of +23% said sales were up compared with a year ago. That was down from +29% in August, but better than the +16% predicted by City economists.

As we head into Autumn, retailers have seen the run of decent sales figures continue. But underlying conditions are clearly tougher, with the sector facing significant challenges - from squeezed household incomes, changing consumer habits to digital disruption.

So, policymakers must be conscious that times are harder for retailers than recent data suggests. With the burden of business rates stifling investment - against the backdrop of an already tough trading environment - the Government must deliver a review of the system over the coming year.

11.19am BST

A Fed rate hike this evening is already old news before it's happened, with investors pricing it in as a certainty.

Instead they will be turning their attention to the months ahead, with traders listening out for clues on whether or not the next hike will come in December.

Fed dots to harden views for December move: Decision-Day Guide https://t.co/tL6T7vHpaU

10.58am BST

The pound is lower this morning as investors remain cautious about prospects for Brexit negotiations between the UK and the EU.

It had recovered in recent sessions after the biggest one-day loss since 2016 on Friday, when Theresa May said talks were at an "impasse".

9.59am BST

Britain's high street banks approved 42,581 mortgages for house purchase in August, which was 4.3% fewer than the same month last year.

It was also down on July, when 43,967 mortgages were approved according to the figures from the banking trade body, UK Finance.

With many would-be buyers holding off making a decision until Brexit is resolved one way or another, lenders are battling for a relatively small pool of borrowers and are having to reduce rates accordingly.

Barclays, HSBC, Halifax and TSB are among the big names to have reduced the cost of fixed-rate mortgages recently, and we expect this trend to continue as lenders try to boost business before the end of the year.

9.33am BST

In case you missed it... the governor of Argentina's central bank, Luis Caputo, resigned unexpectedly on Tuesday after just three months in the job.

Caputo quit just as Argentina is negotiating emergency financial support from the IMF, initially sending the peso down 7%, before trimming some of the losses.

This resignation is due to personal reasons, with the conviction that a new agreement with the International Monetary Fund will reestablish confidence in the fiscal, financial, monetary and exchange rate situation.

The timing could not be worse for Argentina. Caputo's resignation will only add to investor uncertainty.

9.00am BST

The FTSE 250 index, which tends to include firms that are more focused on the domestic market in the UK than those in the FTSE 100, is also down this morning, by 0.2% at 20,422.

It's biggest faller is the AA, with shares down 8.4% at 109p after it blamed a plunge in first-half profits on Britain's "pothole epidemic".

8.44am BST

Major markets across Europe are down this morning, after Wall Street closed lower on Tuesday.

Investors will be cautious ahead of the Fed decision and more importantly its signals for future policy decisions, but markets are also subdued after President Trump's "America First" message at the UN.

Related: Trump is unlikely to forgive the laughter of the UN

8.27am BST

The AA has said this morning that the "beast from the east" earlier in the year triggered a "pothole epidemic" in the UK, and contributing to the highest number of vehicle breakdown call outs in 15 years.

The first half of the financial year has seen exceptional weather conditions, from extreme cold and snow in February and March to the hottest summer in recent memory, with the severe winter also creating a pothole "epidemic" on the UK's roads. All this led to a 15-year high in the number of breakdowns we serviced.

Against this backdrop, I am extremely proud of our achievements and to be reporting results in line with our guidance as we continue to build resilience throughout the business.

Related: UK 'pothole epidemic' helps fuel surge in callouts, says AA

8.08am BST

A rate hike from the Federal Reserve today would be the eighth one since December 2015, Michael Hewson from CMC Markets notes.

The only G7 central bank that has come anywhere close to this level of tightening of monetary policy has been Canada which has seen four rate rises over the same period.

Despite these rate rises, US and Canadian markets have managed to remain close to recent record highs, despite concerns over a break down in the NAFTA trade deal and the start of a fresh round of tariffs this week in the current trade stand-off between the US and China.

7.51am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It's Fed decision day, and investors are pricing in the third US rate hike of the year, as the central bank's chairman Jerome Powell and his colleagues continue to displease President Trump who has said he is not happy with the rate rises.

Fed likely to raise rates, possibly end 'accommodative' policy era https://t.co/ASX9OmyIsh

The Fed are widely expected to hike 25 basis points to 2.25%, in the 3rd hike of the year. Whilst this hike is almost completely priced in and another in December over 76% priced in, investors will be turning their attention to next year.

In June, the Fed indicated 3 hikes across 2019 and these are expected to be carried out one per quarter, for the first three quarters. This leaves traders wondering what the Fed have planned thereafter?