Federal Reserve cuts interest rates, and earns another blast from Trump - as it happened

The US Fed votes to cut interest rates for the second time this year, but president Trump wants more

• Jerome Powell gives press conference
• Latest: Trump says Fed has no guts
• Breaking: Fed cuts rates by 25 basis points
• Bullard wanted deeper cut; George and Rosengren wanted no change
• Fed split over future path of rates

9.34pm BST

Finally, here's my colleague Edward Helmore on today's drama at the Fed:

Under pressure from Wall Street and the White House, the Federal Reserve lowered interest rates on Wednesday for a second straight meeting, but declined to signal if it would continue to drop rates in the future.

Citing the global economic outlook and "muted" inflationary pressures at home, the central bank decided to lower interest rates a quarter of a point to meet a target borrowing rate of 1.75% to 2%.

Related: 'No guts, no vision!' Trump unhappy after Fed announces modest rate cut

9.31pm BST

Wall Street staged a late recovery, after Jerome Powell hinted that the Fed could act aggressively if the US economy turned sour.

9.05pm BST

Reaction is pouring in.

Ronald Temple, Head of US Equities, Lazard Asset Management says:

"Today the FOMC gave investors what they expected. Looking forward to October 30th, ignore the dot plot. What matters most to monetary policy is what happens in terms of US/China trade, Brexit, and US consumer resilience against the backdrop of slowing global growth."

"Today Powell delivered a very hawkish policy rate cut. Although it met market expectations for a 25 basis point cut, the committee was split with officials divided on future rate moves. In fairness, with recent economic data - such as industrial production growth and housing stats- tentatively suggesting that a trough in activity is approaching, a stabilisation in growth is a more plausible scenario than an outright recession, so perhaps there is less need for further easing. The US/China trade war had a starring role in Powell's press conference, but by contrast he was reluctant to refer to the mid-cycle adjustment.

"Today's move was widely expected, and markets should be relatively unmoved, although more disappointingly for investors the Fed's 'dot plot' of their projections for rates doesn't show any consensus for further cuts this year. The Fed's rate cuts also look rather old-fashioned compared to the European Central Bank's (ECB) comprehensive package of easing measures last week. This simplicity could change soon, though, as the Fed's toolkit for monetary policy proves increasingly ineffective against upward pressure on money market rates.

"Recent economic data hasn't been spotless, but it certainly doesn't suggest a looming recession or the need for the Fed to cut rates. Industrial production, capacity utilization, housing sentiment, consumer sentiment, and retail sales all beat expectations in the past week. Headline inflation has been steady, while core inflation has accelerated. The Fed can't legitimately claim it's "data dependent" if it cuts rates against this backdrop. Reigniting QE would be an even bigger mistake."

9.01pm BST

Rajan Naik, Director of Financial Markets Online, has sympathy with the Fed chair:

"Jerome Powell can barely get a break. Attacked by President Trump for not cutting rates far enough, and lambasted by the markets for giving scant future guidance, he knows better than anyone that the central banker's task is often a thankless one.

The irony is the Fed has played this one by the book. With global growth sputtering and no inflationary pressure to worry about, a gentle nudge on the monetary policy tiller was firmly baked into market expectations.

8.41pm BST

8.23pm BST

Q: Does America suffer from having much higher bond rates than other advanced economies [as president Trump has claimed recently?

Global capital markets are highly integrated, and our rates are being pulled down by very low rates abroad, says Powell.

8.20pm BST

Q: Donald Trump has called the Fed 'boneheads' recently, and he just called you a 'terrible communicator'. Any plans to change?

I'm not going to change my practice of not responding to comments from elected officials, says Powell -- rising above the tirade of tweets from the White House.

8.15pm BST

Q: Have you taken any steps to bolster morale at the Fed, because of the criticism from Donald Trump?

Morale is very high, we're very unified, Powell says firmly.

We feel we're doing the best job we can to serve the American people.

Jay Powell on #Fed: "we're very unified" in response to Trump criticism.

Though clearly they're NOT "very unified" on future policy needs...

8.12pm BST

Q: You say the economy is strong, but there are signs it is slowing. How do you see it evolving over the next year?

Jerome Powell says that he, and the FOMC, expect moderate growth, a strong labour market, and inflation back up to 2%.

8.09pm BST

Jerome Powell is channelling Milton Friedman!

Asked about how the rate cut will affect the economy, the Fed chair cites Friedman's maxim that monetary policy works with an lag.

Powell quotes Friedman. Econ 101. "aTMi pic.twitter.com/stmxcondVe

8.06pm BST

Q: Does the Fed have enough firepower to handle a downturn?

Powell says it is a mistake to hold onto your firepower until a downturn has gathered moment.

8.05pm BST

"It's a challenging time, I admit it" says Powell rather frankly, when asked about the Fed's policy stance.

"What's the Fed's reaction function now?" asks @mckonomy. "It's an unusual situation," says Powell, citing the strong economy, before mentioning geopolitical risks to trade risks and financial conditions. "It's a challenging time."

8.01pm BST

Q: What concerns do the Fed have about the trade war?

Trade policy isn't our responsibility, Powell says. But it does affect the stance of monetary policy.

7.56pm BST

The Fed's dot plot, showing where policymakers expect interest rates to be in future, is meant to provide clarity.

But when the FOMC is split, it doesn't. And Powell is playing down its importance, by explaining that Fed governors have a range of views...

Can we please just get rid of the dot plot? It's taking up so much space in the room and clearly Powell doesn't think it helps us understand what will happen next.

#Powell "people have different perspectives" - pls pls pls stop asking me about all these different dots in the dot plot

7.54pm BST

Powell has hinted that the Fed could stop unwinding its stimulus measures, and potentially expand its balance sheet again.

Powell: "There's real uncertainty and it's possible we need to resume the organic growth of the balance sheet." #Fed

Powell hinted at the end of "soft QT". To be looked at carefully in the coming days and discussed at the next meeting. Excess reserves will then be kept constant and the balance-sheet increasing roughly with nominal GDP, as opposed to currently constant balance sheet

7.49pm BST

Q: What's caused the sudden jump in the repo rate this week, and are you worried? (the cost of overnight borrowing between banks, as explained here)

Powell says that the spike was caused by tax bills, and the cost of settling bond purchases- which left banks unusually short of ready cash.

7.45pm BST

Q: You are trying to speak for a divided Fed. What's your own view?

Powell says the diversity of views on the FOMC is a "healthy" sign.

7.43pm BST

Journalists are asking Jerome Powell for more clarity about future interest rate moves.

It very much depends on the flow of data, the Fed chair replies.

7.40pm BST

Jay Powell is now taking questions, having run through today's statement (posted earlier).

Q) Do you still see this as a mid-cycle rate cut?

7.38pm BST

Donald Trump has just tweeted his displeasure - accusing the Fed of lacking guts, sense and vision.

He also takes a personal swipe at Powell, calling him a 'terrible communicator'.

Jay Powell and the Federal Reserve Fail Again. No "guts," no sense, no vision! A terrible communicator!

7.36pm BST

Jerome Powell explains that the US economy seems strong, with solid job creation.

But, weakness abroad is weighing on the growth. He says this is partly due to trade tensions (a clear reference to the US-China trade war).

7.34pm BST

Federal Reserve chair Jay Powell is giving a press conference now. You can watch it here (I'll try to embed it at the top of the blog too).

7.31pm BST

An interest rate cut ought to weaken a currency (as investors receive a lower rate of return). But the dollar is strengthening...

Looks as if mkts see the 25bps cut as "hawkish cut." Dollar Index jumps 0.3%. pic.twitter.com/p646HGSn3Y

7.26pm BST

This is a hawkish rate cut, argues Naeem Aslam of Think Markets.

We have a hawkish rate cut - meaning even though the Fed has cut the interest rate today but there are no clear signals in relation to further rate cuts. In other words, the fed is no rush to cut the interest rate again.

The current move by the Fed has made the dollar stronger and pushed the gold price lower. But remember it is all about Trump twitter rant and it is something that traders can not ignore.

7.25pm BST

Stocks have fallen since the Fed decision. The Dow Jones industrial average is down 183 points at 26,926, down almost 0.7%.

That suggests traders had expected the Fed to be more dovish. They may also be concerned that policymakers are divided about the future path of rates.

New projections showed policymakers at the median expected rates to stay within the new range through 2020. However, in a sign of ongoing divisions within the Fed, seven of 17 policymakers projected one more quarter-point rate cut in 2019.

Five others, in contrast, see rates as needing to rise by the end of the year.

Stocks lower as only 7 of 17 Fed officials project another rate cut in 2019. Very different views on what the US economy needs inside the FOMC... pic.twitter.com/tY3jJKKj9r

7.21pm BST

This chart shows how the Fed raised interest rates nine times since the end of the financial crisis, followed by two cuts (July and today).

7.18pm BST

Will today's quarter-point rate cut satisfy President Trump, who recently called the Fed 'boneheads' for not cutting rates?

Possibly not.

"The decision by the Fed to cut interest rates by 0.25% was largely as expected. Donald Trump would like them to have done more judging by his regular rants on Twitter but the US economy remains in fairly good shape and there is no sign of an imminent recession so a cautious approach makes sense.

We are likely to see more gradual interest rate cuts over the course of the year though as the US China trade war continues to hinder the global economy."

7.13pm BST

Here's the statement from America's central bank, explaining why it has cut US borrowing costs.

As you can see, the Fed argues that the US economy is still in good shape, with companies creating jobs, and inflation low.

Information received since the Federal Open Market Committee met in July indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports have weakened. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent. This action supports the Committee's view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

7.10pm BST

The Fed has split 7-2-1 on today's vote, with two hawks and one dove dissenting from the rest of the room.

Seven policymakers agreed to cut by 25 basis points, to a range of 1.75% to 2%. They were chair Jerome Powell, John Williams, Michelle Bowman; Lael Brainard; Richard Clarida; Charles Evans; and Randal Quarles.

7.03pm BST

NEWSFLASH: The Federal Reserve has cut borrowing costs by a quarter-point.

This lowers the Fed funds rate to 1.75%-2%. This is the second such cut in less than two months.

Bullard voted for 50 bps rate cut and Rosengren and George wanted to keep rate unchanged #Fed

BREAKING: Fed cuts interest rates 25bps but does not sound in a hurry for more cuts

-Only 7 of the 17 Fed leaders predict another rate cut this year
-5 predict rates will stay same. 5 predict an increase.

-Statement says Fed will "act as appropriate" to keep economy growing

6.57pm BST

It will be quite a shock if the Fed doesn't cut US interest rates by 0.25% in a couple of minute.....

18 Sep - 01:53:04 PM [RTRS] (FFZ9 FFX9) - FEDERAL FUNDS FUTURES IMPLY TRADERS SEE 70.4% CHANCE OF A 25-BPS RATE CUT VS 48.5% LATE TUESDAY - CME GROUP'S FEDWATCH

I'm going out on a limb here, but I think, just maybe:
The Fed's gonna cut.
25bps.

6.55pm BST

Financial commentator Heidi Moore has written a good explainer on the repo market problems, which non-financial experts may find handy:

Okay, for everyone who is confused: Here is a quick-and-dirty explainer thread on the overnight lending market that the Federal Reserve just bailed out.

This is also called the "repo" market because the specific borrowing-and-paying-back is called a "repurchase agreement." But it's basically pawning.

The repo market should be the most secure in finance because 1) you expect banks to know how much cash they need for 12 hrs or so

3) This issue involves the ghosts of 2008, when banks were so freaked out about which one of them might suddenly collapse that they stopped lending to each other. Banks not lending to each other is VERY BAD.

The overnight lending market is a big part of that.

So when that's shaken, it indicates there's a trust issue somewhere.

Right now, we have no details and no facts about what shook the repo market enough for the Fed to come in and bail it out.

Okay but wait: The Federal Reserve injected $53 billion today and plans to inject another $75 billion into the repo market tomorrow.

That doesn't mean the market NEEDS $75 billion but it means the Fed REALLY wants to avoid anyone worrying.https://t.co/AEoXHHkUQL

So is this good? Is this bad?

It's...not great. But it's not a crisis in itself.

This market should be rock solid. It should never need intervention. So any intervention is concerning. But also, things seem under control; the Fed offered $75bn and only $53bn was used.

6.52pm BST

The Fed may also update us on the unusual spike in borrowing costs between US banks this week.

As explained earlier, this 'repo' rate is the cost of borrowing from another bank until the next day, in return for various collateral. It should be a) seamless, b) inexpensive, and c) boring. But it was none of those things yesterday, when the repo rate spiked to 10%.

GOLDMAN: "We do not believe that this widening in repurchase spreads is a precursor to a period of financial market stress - it appears to be driven by technical factors, rather than diminishing investor confidence in the market, as we saw in 2008 .."#Repo

6.38pm BST

Tension is building in the markets, with less than 30 minutes until the Federal Reserve releases its latest decision on US interest rates.

Investors widely expect the Fed to cut its headline funds rate to 1.75%, having lowered it to 2% back in July.

Market expectations see slightly more than one additional cut after this one before year-end, and nearly 100 bps in collective cuts by the end of 2020 (although they had been even more dovish a week ago).

As such, there is a risk that absent a strong signal that the Fed is clearly at the beginning of a sustained easing cycle, we could see some disappointment.

4.51pm BST

Britain's FTSE 100 has ended the day down 6 points, at 7,314.

That's two subdued day's trading in a row (yesterday the Footsie only lost a single point). City investors want to hear what Fed chair Jerome Powell says at his press conference in just over two hour's time.

3.38pm BST

Time for a recap

3.00pm BST

Newsflash: Britain's Bapla trades union has just called off a pilot strike at British Airways, scheduled for next Friday.

Shares in BA's parent company, IAG, have just jumped - up 1% today, having been down 1%.

Balpa says a strike planned by British Airways pilots on 27 September in a dispute over pay has been called off

2.48pm BST

Ouch! Over in New York, shares in courier and shipping company FedEx have slumped by 13% after it issued a profits warning.

FedEx slashed its outlook for the current financial year last night after missing profit forecast for the last quarter.

"Our performance continues to be negatively impacted by a weakening global macro environment driven by increasing trade tensions and policy uncertainty."

Fedex is down 14% since Deutsche first published this chart in July.$FDXpic.twitter.com/fPt2gpe4AL

2.39pm BST

Just in: President Donald Trump has announced he is imposing new sanctions on Iran - but it's not clear what that will mean in practice.

Trump also repeated his claim that America is energy independent (although this has only been true in certain months):

I have just instructed the Secretary of the Treasury to substantially increase Sanctions on the country of Iran!

So nice that our Country is now Energy Independent. The USA is in better shape than ever before. Strongest Military by far, biggest Economy (no longer even close), number one in Energy! MAGA = KAG!

#OOTT slides after Trump tweet on sanctions pic.twitter.com/R5gxKsKdch

2.17pm BST

Today's fall in inflation can't come soon enough for families struggling through the aftermath of the financial crisis.

A fresh report from the New Economics Foundation today shows that average living standards are still below their levels in 2008.

Official statistics suggest average livings standards returned to 2008 levels in 2015. But when calculated to reflect the true costs of living, NEF analysis has shown that a combination of the depth of financial crisis, austerity and the vote to leave the EU has meant that average living standards are in fact still yet to recover pre-recession levels - by around 1.6% or 128 per head.

Outside of Westminster and Whitehall, it's little wonder most people care more about not having shared in the last recovery, than they do about the chances of the next recession.

Related: Britons are still worse off than in 2008, new research claims

1.27pm BST

The drop in UK house price inflation will be welcome news to those hoping to get on to the property ladder, but it's still a stretch.

Although wages are now outpacing house price growth, affordability is still a huge issue - not least in London, as the Resolution Foundation explains here:

But despite the slowdown in house price growth - and a welcome pick up in earnings growth - the gap between growth in house prices and earnings since 2011 remains huge. pic.twitter.com/vsSxZEndaP

But across London, pay growth has only just started outpacing house price growth. The bigger picture is that since early 2011 house prices have increased six times faster than earnings in the capital. Home ownership in London remains far out of reach for many families. pic.twitter.com/dM038RRUkD

1.08pm BST

What does Brexit uncertainty mean in practice?

The heightened political and Brexit uncertainty, as to both outcome and timing, is adversely affecting customer confidence. We are not anticipating any improvement in this for the rest of our financial year.

Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes "

An interim review cannot be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit.

Related: Car dealer Pendragon predicts bleak year as it reports first-half loss

12.27pm BST

Despite the slowdown in the south, English house prices are significantly higher than the rest of the UK.

Here's the details from the ONS:

12.09pm BST

Share in UK building firms have been knocked by the slowdown in house price growth.

Persimmon, Britain's second-biggest house-builder, are the biggest faller on the FTSE 100 - down 2%. Taylor Wimpey has lost 2.1%, while Barratt is 1.5% lighter. Their profits will suffer if prices continue to fall in the lucrative London and South-East region.

12.03pm BST

We now know that UK wages are rising more than twice as fast as inflation.

Last week's labour market report showed total pay (including bonuses) has jumped by 4.0% in the last year. Basic pay rose by 3.8%.

The figures mean more good news for households following last week's wage data.

In the three months to July, UK workers saw their average weekly earnings (including bonuses) increase by 4.0%, the highest growth rate in 11 years. With year-on-year CPIH inflation at 1.7% real wages are set to continue growing, boosting households' spending power.

Average UK wages are now rising:

2.5 times as fast as the cost of living
3 times as fast as average private rents
6 times as fast as house prices

It's been a long, long time since living standards have risen as quickly as they're rising now.

11.48am BST

Core inflation, which strips out volatile items, also fell to a near three-year low.

It's now just 1.5%, down from 1.9% in July, confirming that inflationary pressures weakened over the summer.

11.42am BST

This is from the Resolution Foundation:

Despite this potential for rising inflation in the future, low inflation now is helping boost real wages - and provide welcome increases in households' incomes. pic.twitter.com/F7PPPAPhun

11.24am BST

The NIESR thinktank have crunched through today's inflation data, and concluded that Brexit uncertainty is holding prices down.

Jason Lennard, NIESR's senior economist, explains:

Consumer price inflation was lower than expected at 1.7 per cent in the year to August 2019. Our analysis of 130,000 goods and services included in the basket suggests that fewer firms raised prices than is typical for this time of year.

Firms are probably waiting to see beyond 31 October before adjusting prices. The slowing of inflation was widespread, falling in 10 of the 12 regions of the United Kingdom with the biggest drops in Northern Ireland and Wales.

According to #CPI data out today. #inflation fell by 0.4 pp to 1.7%. Our #analysis suggests the slowing of inflation was widespread across the country, driven by fewer firms increasing prices. - read @jason_lennard 's take in full:https://t.co/AI6WIS0VBl

10.40am BST

The drop in UK inflation to 1.7% last month is clearly good news for consumer, says Ian Stewart, chief economist at Deloitte:

Sharply lower inflation is great news for the UK economy. Along with soaring earnings, low inflation boosts consumer spending power just when the economy needs it.

Falling inflation gives the Bank of England more headroom to loosen monetary policy. Corporate investment and manufacturing are weakening, and consumers need to keep consuming to keep UK growth going - lower inflation will help them do just that.

The falling inflation rate could be an early signal of a cooling economy, in line with what we have seen in the US and the Euro Area, with the rate of price inflation falling across both goods from 1.7% to 1.3% and services, from 2.5% to 2.2%, showing the wide-ranging effects of the slowdown.

"Recent falls in the value of the pound and the spike in oil prices over the weekend should boost the headline rate in the coming months, with higher prices for fuel and for imported goods putting pressure on households' purchasing power and business margins, and further curtailing demand.

Today's inflation data show that consumer price inflation has fallen to 1.7% in August, driven by lower prices overall for recreational goods, and clothing and footwear. These figures, combined with the fastest wage growth in many years, delivers a substantial boost to UK households' spending power that will help to support the economy.

However, there remain a number of short-term risks to inflation, particularly from external supply shocks. The recent disruption to Saudi oil supplies could manifest as higher energy costs with knock-on impacts on non-oil sectors and UK households if they persist. This, combined with recent sterling weakness in August, could contribute to higher input costs and imported inflation. There is also the possibility that additional supply side shocks could materialise from a no deal Brexit, which could result in higher tariffs and supply disruptions, thus exerting further upward pressure on the price of consumer goods.

10.00am BST

Wales is bucking the UK housing slowdown, with prices up a punchy 4.2%:

Four regions of the UK seeing average house price falls in July. N. East had the biggest fall (-2.9%y/y), with London, the S. East & the East also seeing average prices drop. Wales at the top of the table with 4.2%y/y. pic.twitter.com/DPBum5JPPZ

9.57am BST

Across England, house prices are now falling in nearly half of all regions.

The average house prices fell in London, South East England, the East of England and the South East in July, compared to July 2018, the ONS reports.

Average house prices in the UK increased by 0.7% in the year to July 2019, down from 1.4% in June 2019. This is the lowest annual rate since September 2012, when it was 0.4%.

Over the past three years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England.

9.50am BST

The drop in inflation last month, to a 32-month low, is welcome news for consumers, says economist Howard Archer of the EY Item Club.

He points out that wage growth hit 4% in July, meaning real wages are rising, adding:

Improved consumer purchasing power is particularly welcome news for an economy currently struggling markedly amid major Brexit, domestic political and global economic uncertainties - consumers have been the most resilient sector of the economy and their purchasing power will be critical to whether this resilience can continue.

9.45am BST

The bad news for households is that food and drink prices jumped last month.

Food and non-alcoholic beverage prices rose by more between July and August 2019 than between the same two months of 2018.

The effects were relatively small from all categories within this heading, with the largest upward ones coming from bread and cereals (from products such as dried potted snacks, breakfast cereal and packs of individual cakes), and meat (principally cooked ham).

9.43am BST

Mike Hardie, head of inflation at the Office for National Statistics, explains:

The inflation rate has fallen noticeably into August, to its lowest since late 2016.

"This was mainly driven by a decrease in computer game prices, plus clothing prices rising by less than last year after the end of the summer sales.

9.41am BST

This chart shows how UK inflation was dragged down by recreation and clothing costs last month, to just 1.7%.

Recreation and culture: the largest effect came from games, toys and hobbies (particularly computer games including downloads), with prices overall falling by 5.0% between July and August 2019 compared with a smaller fall of 0.1% between the same two months a year ago.

Clothing: where prices rose by 1.8% this year compared with a larger rise of 3.1% a year ago. The main effect came from clothing, particularly children's clothing.

9.33am BST

Newsflash: Britain's inflation rate has fallen to its lowest level since December 2016.

The consumer prices index rose by 1.7% year-on-year in August, the Office for National Statistics says. That's down from 2.1% in July, and weaker than expected.

9.12am BST

The pound is under pressure this morning, after top EU officials warned that a no-deal Brexit is a serious risk.

Outgoing European president Jean-Claude Juncker told the European Parliament there was a "palpable" risk that Britain crashes out of the European Union without a deal.

I advise everyone not to underestimate the consequences, clearly for the United Kingdom first of all but also for us, of the absence of a deal.

If the United Kingdom leaves without a deal, I want to remind you that all these questions will not just disappear.

Some three years after the Brexit referendum we should not be pretending to negotiate."

"The risk of a no deal [#Brexit] remains real," warns @JunckerEU at the European Parliament, though he believes it's still possible to avoid.

However, Juncker says until @BorisJohnson offers feasible alternatives to the Irish backstop (as requested), there's "no real progress." pic.twitter.com/8O0NwBagPL

The pound, following Juncker's "palpable" comment pic.twitter.com/G3raFS9kBp

9.04am BST

Attention oil traders: The US secretary of state is heading to Saudi Arabia, as America plans its response to last week's oil attacks.

8.53am BST

The UK government is often criticised for taking laissez faire approach to takeovers.

Related: Leadsom intervenes in takeover of defence supplier Cobham

8.19am BST

The US repo market is effectively an obscure part of the financial system's plumbing... which started making alarming clanking noises yesterday.

Reuters has written a handy explanation to this overnight lending market between banks:

The system typically hums along with the interest rate charged on repo deals hovering close to the Fed's benchmark overnight rate, currently set in a range of 2.00% to 2.25%. That rate is expected to be cut by a quarter percentage point on Wednesday.

But sometimes, investors get fearful of lending, as seen during the global credit crisis, or at other times there are just not enough reserves or cash in the system to lend out, as appeared to be the case this week. And that can cause a squeeze on the market and send borrowing costs zooming higher.

Everything you need to know about the repo market but were too afraid/couldn't be bothered to ask...https://t.co/ejjnfgtusn

8.09am BST

It's never good to see banks short of cash.

But yesterday, the cost of overnight borrowing spiked alarmingly, in a sign that financial institutions were struggling to get their hands on dollars.

US overnight repo rate jumps to 10%, highest in years. pic.twitter.com/axRT1hRLGq

Repos are vital to the financial system because they give companies access to cash overnight using US Treasuries as collateral.

Ashish Shah, co-chief investment officer for fixed income at Goldman Sachs Asset Management, described the abrupt tightening of the US money market as a "big deal".

Dramatic moves in the money mkt that led to US Central bank shunting $53bn into the system on Tue show that the unexpected can still occur, even in an era of tight bank regulation & relative fin stability. It looked like banks were suddenly short of cash. https://t.co/Dcnof1GlgJ pic.twitter.com/6noMgEgAlZ

7.42am BST

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

...The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries. They can't believe how lucky they are that Jay Powell & the Fed don't have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!