UK interest rates kept at record lows , Greek parliament approves pension deal -as it happened

UK central bank has voted to maintain interest rates at 0.25%

• European commissioner Moscovici meets Greece's Tsipras
• Pound hit by Bank's inflation comments
• Full story: Bank of England leaves rates at 0.25%
• Latest: Bank decision released

Earlier:

• Dollar surges on back of Fed rate hike
• UK bond yields hit highest since Brexit vote
• Greek MPs vote on controversial giveaways

6.33pm GMT

The vote in the Greek parliament saw some unlikely allies back the government's Christmas bonus to pensioners, with the final figure in favour 196. Our correspondent Helena Smith says:

#Greek pension bonus passes with 196 votes (61 'present') in landmark ballot that has seen far right #goldendawn back leftist #syriza

How long & short a day is in politics! This AM #Greek gov on the defensive over pre-Xmas fiscal gifts, now gamble seems 2 b paying off

Will #Greek PM #AlexisTsipras continue on his #anti-#austerity roll after 2nite's vote? That is the question

The sight of #Greek debt crisis mutating into war of words between country's #creditors is warming the cockles of many hearts in #Athens

5.49pm GMT

Greek parliament approves pension deal

#Greece's parliament approves #Tsipras' controversial pensioners bonus w/ 195 out of 300 votes.

5.32pm GMT

With the Federal Reserve raising interest rates for the first time in a year and talking of three more increases to come next year, the dollar has strengthened and helped push banking shares higher, supporting European markets in general. Simon Gergel, chief investment officer of UK equities at Allianz told Reuters:

Rising interest rates are generally quite good for banks, depending on their specific situation, but in general they are sitting on large deposit bases and they can make a bigger spread as interest rates go up.

4.59pm GMT

In Athens the vote on the controversial legislation has just begun as thousands of pensioners take to the streets in Athens.

With the support of three political parties and the ruling two-party coalition the ballot is easily expected to secure sought support to be passed into law. That means pensioners will receive a 13th payment before Christmas. Helena Smith reports:

Pensioners, representing organizations across the country, have gathered en masse in central Athens, in a protest rally now headed towards the prime minister's office. The demonstration could not be better timed, coinciding with the vote and the spotlight the Greek PM, Alexis Tsipras, has inadvertently placed on pensioners with the announcement of his surprise pre-Christmas bonus. Holding banners decrying the loss of benefits many have suffered since the crisis began, they demanded that the cuts be reinstated. "We can't forget what we gave to the social security system, we are not going to give up what is rightly ours, we are not going to sell our dignity," the organisations said in a statement.

Pensioners, some living on as little as a300 a month, are among those who have been hardest hit by the harsh fiscal policies debt-stricken Greece has been forced to apply in return for international rescue funds. While Tsipras' unexpected gift has been welcomed most do not feel it goes far enough. "They have to give us back our full pensions, which represent all the years that we worked, all the contributions that we made, not make a mockery of us with crumbs and bonuses," said Dimos Koubouris, who heads the federation of pensioners.

4.40pm GMT

The Greek parliament is due to start voting shortly on the government's plan to pay one-off Christmas bonuses to pensioners, the move which annoyed the country's creditors so much they put debt relief on hold.

4.38pm GMT

As markets move higher, Chris Beauchamp, chief market analyst at IG, said:

Despite a woeful performance from the mining sector and falling oil prices, the FTSE 100 is ending the day firmly in positive territory. Clearly the number of stocks expected to benefit from rising US rates outpaces those who will suffer from lower commodity prices. Investors are spending their first 24 hours in a new world, one dominated by rising US interest rates plus an impending fiscal stimulus that is meant to rescue the US from economic malaise.

With the euro in full flight it is not surprising to see eurozone markets racing, and this is probably something we should get used to for the year ahead. Meanwhile, the FTSE 100's performance will depend on whether the rising dollar does too much to torpedo the commodity rally, or whether higher rates will lift bank stocks sufficiently in the year ahead to offset this. 15 December 2016 may well prove to be a microcosm of what 2017 has to offer.

4.21pm GMT

Back with the US and the Dow Jones Industrial Average continues to climb following the Fed rate decision.

It is now up around 154 points at 19,946 and heading towards 20,000.

4.12pm GMT

And Moscovici has also met the head of Greece's opposition party New Democracy:

Good exchange of views with @kmitsotakis. @EU_Commission has consistently called for broad political support for necessary reforms. #Greece pic.twitter.com/2zvdK1gseq

4.08pm GMT

Back with Greece and European commissioner Pierre Moscovici has tweeted:

Timely meeting with @tsipras_eu to discuss conclusion of the second review. #Greece pic.twitter.com/PbzCMGssed

4.03pm GMT

The FTSE 100 has regained the 7000 level for the first time since the end of October.

Bank shares are among the leading risers after the US rate hike from the Federal Reserve, and hopes that Italian banks will be recapitalised.

3.54pm GMT

Earlier there were some new US economic figures, all fairly positive in the wake of the Fed's interest rate rise and plans for another three increases next year.

The consumer price index rose 0.2%, in line with expectations, while the New York Federal Reserve's Empire manufacturing index came in at 9 in December, well above the consensus of 4 and the November figure of 1.5.

3.20pm GMT

Tsakalotos has defended Athens' plans to pay out one-off benefits for low-income pensioners ahead of Christmas. A day after eurozone lenders put short-term debt relief for Greece on hold in response, he told Reuters in Berlin:

I don't think this is a big issue. We have bigger fish to fry.

2.48pm GMT

On Wall Street, the Dow has opened higher, after losing more than 100 points yesterday following the Fed rate hike.

Dow Jones up 46 points, or 0.2% to 19,837.04

2.37pm GMT

His comments came as French President Franiois Hollande jumped to Greece's defence of Greece after European creditors pulled a recently announced debt relief package for the country.

Hollande said ahead of today's summit of EU leaders that

it is out of the question to ask for further additional efforts from Greece or prevent them from taking a number of sovereign measures that respect the commitments" that Greece previously took.

2.36pm GMT

Greek bond yields are surging, with ten-year yields hitting a one-month high of 7.61%, up 25 basis points. Short-dated yields spiked to a four-month high ahead of a parliamentary vote on a bonus to poor pensioners that threatens to derail the country's debt relief plans.

Two-year bond yields soared more than 150bps to 8.65%, the highest since August, and five-year yields jumped 16 bps to 8.34%.

#Eurozone suspends #Greece debt relief as Gov starts spending outside agreed fiscal plan. Ultimately, strains were always going to show.

1.37pm GMT

Back in the markets, the euro has slipped below $1.04 for the first time in 14 years.

#Euro in free fall. Drops below $1.04. pic.twitter.com/cHhAUpPU2C

The Fed over in the US is tightening their belt and the ECB is still no way close to taper its monetary policy. Traders have gone aggressive today and the divergence in monetary policies is the major focal point for them.

Gentle reminder that the trade weighted euro is up 6% from its 2015 lows. pic.twitter.com/sYSWkicMGs

12.52pm GMT

Newsflash: Rupert Murdoch's 21st Century Fox has formally lodged its 11.7bn bid to take full control of Sky.

Murdoch will now need to gain regulatory approval for the deal, which values Sky at more than 18bn, which will give him control of pay-TV operations in the UK, Germany and Italy; in addition to ownership of the Times, Sunday Times and Sun, and radio group TalkSport.

Fox has not raised the initial 10.75 per share offer it tabled on Friday.

Related: Rupert Murdoch confirms 11.7bn Sky bid

12.46pm GMT

City experts have rapidly digested today's news from the Bank of England, so here's the best early reaction:

Ian Kernohan, economist at Royal London Asset Management, predicts that the Bank of England will leaves rates unchanged for some time:

"The Bank of England was not expected to change policy at this meeting, and their statement suggests that the balance of arguments favours keeping policy unchanged for the foreseeable future. They note that the forward-looking components of business surveys are weaker than those for current output levels, suggesting a slowdown in 2017. Also, with trade weighted sterling moving higher since their last meeting, this would result in a slightly lower path for inflation than they had envisaged.

"The MPC will remain sensitive to any slowdown in economic activity next year, with real income growth squeezed by rising inflation and Brexit uncertainty impacting corporate investment plans. In my view, the balance of probability still favours another small rate reduction next year, and with the Fed hiking rates, this will continue to put downward pressure on sterling against the dollar."

"With inflation moving towards the Bank's 2% target quicker than expected, the only way is up for interest rates in 2017. Base rate hikes will be the tool of choice for the monetary policy committee to keep prices in check. Mortgage holders should consult their advisers now about fixing their rates before they rise"

In August, by cutting the bank rate and expanding its asset purchases the BoE helped avoid a crisis immediately after the Brexit vote. The good news is that the work is over for now. The UK economy requires no further support from monetary policy. The economy has outperformed expectations since the referendum. And while growth is set to slow next year the risk of recession looks low.

The BoE's GDP growth outlook of 1.4% in 2017 and 1.5% in 2018 is broadly in line with our own call of 1.5% growth in each year. The final minutes of the year indicate that the MPC is in a neutral gear for now.

12.39pm GMT

From the Bank of England, my colleague Katie Allen reports:

The Bank of England has left interest rates at their record low of 0.25% but repeated a warning that higher inflation and slower wage growth risk squeezing household budgets and spending next year.

The Bank's nine-strong monetary policy committee voted unanimously to keep rates on hold and maintain the current programme of electronic money printing known as quantitative easing. Policymakers had cut rates and expanded QE back in August to shore up confidence in the wake of June's vote to leave the EU.

Related: Bank of England leaves UK interest rates on hold at 0.25%

12.21pm GMT

The pound has fallen sharply against the US dollar, as investors digest today's Bank of England decision.

Today's minutes show that the Bank has revised its inflation forecasts down a little, due to the recent recovery in sterling. So that means there's less chance that interest rates might be hiked.

"Since the Committee's previous meeting, sterling's trade-weighted exchange rate has appreciated by over 6%, while dollar oil prices have risen by 14%.

All else equal, this would result in a slightly lower path for inflation than envisaged in the November inflation report, though it is still likely to overshoot the target later in 2017 and through 2018."

Pound falls against dollar after Bank of England's latest comments on inflation https://t.co/Eq1QZgQ145 pic.twitter.com/ajVdwWO5Fo

12.13pm GMT

The Bank of England believes that the global economy could benefit from Donald Trump's pledge to boost government spending.

The MPC says:

"Since November, long-term interest rates have risen internationally, including in the United Kingdom.

In part, this reflects expectations of looser fiscal policy in the United States which, if it materialises, will help to underpin the slightly greater momentum in the global economy evident in a range of data since the summer."

12.11pm GMT

The minutes of this month's Bank of England meeting show that the central bank sees no need to change monetary policy, as little has changed since November's inflation report.

The monetary policy committee says:

"A slowdown in growth remained likely, but there had been little news since the time of the November inflation report about domestic activity and, although the near-term global outlook had improved, this was counterbalanced by more elevated risks."

"Monetary policy could respond, in either direction, to changes to the economic outlook as they unfolded to ensure a sustainable return of inflation to the 2% target."

12.03pm GMT

The BoE has also voted to leave its quantitative easing programme, created to stimulate the UK economy, unchanged at today's meeting.

That means it will still buy and hold 435bn of UK sovereign debt, and 10bn of corporate debt too.

MPC holds #BankRate at 0.25%, maintains government bond purchases at 435bn and corporate bond purchases at 10bn. pic.twitter.com/mUcf8uYdRW

12.00pm GMT

Breaking: The Bank of England has voted to leave UK interest rates unchanged at their current record low of 0.25%.

More to follow

11.59am GMT

Here we go!

Live shots as the Bank of England's MPC get down to business on interest rates this month pic.twitter.com/8O6CiwvVGw

11.59am GMT

The Bank of England's critics claim it blundered this summer by slashing interest rates to 0.25% and restarting its quantitative easing plan.

They point to the decent economic data since the Brexit vote, as evidence that the BoE over-reacted.

11.50am GMT

It's time for our regular update from Reuters' source in the Italian government:

RTRS - ITALIAN GOVERNMENT READY TO INTERVENE WITH 15 BLN EUROS TO RECAPITALISE AILING BANKS IF NECESSARY - SOURCES

11.25am GMT

Just 25 minutes to go until the Bank of England announces its interest rate decision.

With everyone expecting No Change, the real news will probably be in the minutes of this month's meeting.

11.24am GMT

OUCH! The euro just slumped to a new near 14-year low against the rampant US dollar.

EURO DROPS 1% TO $1.0435, LOWEST LEVEL SINCE JANUARY 2003

11.14am GMT

Speaking of Greece, European commissioner Pierre Moscovici has hit back at the International Monetary Fund over its warning that Athens hasn't tackled its tax and pension problems.

Writing in the Financial Times, Moscovici said Greece had made "unprecedented efforts" including "major reforms of the pension, personal income tax and VAT systems".

Is the commission being too lenient on Greece in contrast with an ostensibly more realistic IMF position? Of course not! While it has worked tirelessly to help Greece build a sustainable recovery, it has also pressed the authorities there to respect their commitments. The commission has been an honest broker, representing the interests of the eurozone as a whole.

The next step is to conclude the second programme review, which hinges on an agreement to bring the IMF on board. This cannot happen as long as positions are defined by dogma or short-term political tactics with no regard for the social effect of the measures proposed.

It's just like old times. pic.twitter.com/kHlRQprVes

11.01am GMT

Over in Greece, prime minister Alexis Tsipras seems to have found support from the majority of political parties who will be backing his drive to hand out pre-Christmas fiscal gifts in a roll-call vote later today.

MPs are being urged to back Tsipras, even though the giveaways have alarmed Greece's creditors - prompting them to freeze short-term debt relief plans yesterday.

"This is not a chance moment but a moment where parliament should affirm the right of the government of the country to do the self-evident. The agreement [with lenders] foresees it and the numbers prove it. I don't understand why we should wait. Citizens' needs, pensioners' needs have a priority over the needs of Brussels."

The report of the institutions regarding @atsipras announcement on benefits will express "serious concerns". Will be published shortly.

10.46am GMT

Gold has hit its lowest level since February this morning, down 1% to just $1.134 per ounce.

That's partly because the US dollar has rallied (so you need fewer dollars to buy the same amount of gold). But gold is also less attractive in an environment of higher inflation and interest rates, as it doesn't yield anything.

FTSE is down 0.14% at 6,939.23 as gold shares tank after the Fed raised rates & said more to come. Fresnillo -9%, Randgold -7%.#UKshares

10.39am GMT

JD Sports has become the latest retailer to face serious criticism over working practices, a year after its rival Sports Direct found itself in very hot water for paying staff less than the legal minimum.

An investigation by Channel 4 found evidence of staff at its Rochdale warehouse being badly treated, including a "3 strikes and you're sacked" policy, staff being threatened with dismissal for sitting down, and airport-style security checks and random searches.

Related: JD Sports to investigate conditions at warehouse after 'prison' claim

"These are degrading conditions to work in. The practices exposed at JD Sports show just how little value some companies attach to their staff.

"JD Sports' initial response - denying the problems - doesn't instil confidence.

9.57am GMT

French fund manager Etienne de Marsac has tweeted a handy graph, showing how UK and US government borrowing costs have jumped, thanks to the Fed (as flagged earlier).

#Fed #rates pic.twitter.com/Niazj3xUkC

9.44am GMT

Newsflash: UK retail sales are still growing , despite the ongoing uncertainty around Brexit.

Retail sales volumes grew by 0.2% in November, and were 5.9% higher than a year earlier. That's down from 1.8% monthly growth in October.

In the latest month growth continues to be driven by a broad increase in all 4 categories, with all but petrol making significant contributions in November. Petrol provided its lowest contribution to growth since November 2014, which could reflect rising petrol prices.

The highest contribution to growth was non-food stores, contributing 2.1 percentage points to growth. This large increase in non-food volumes could be a result of consumers taking advantage of Black Friday deals on a number of non-food products.

UK retail sales still going strong, with volumes up 5.6%y/y in the 3 months to November. But we are coming to the end of falling shop prices pic.twitter.com/lBuc8cLBCl

When the going gets tough, the British go shopping. Underlying strength will do well to persist into 2017 however

9.14am GMT

Boom! Output across the eurozone's factories has hit a 32-month high in December, according to the latest healthcheck from data firm Markit.

But firms also report that the cost of raw materials has jumped -- factory input prices are rising at their faster rate since May 2011.

#Eurozone #PMI steady at 53.9 signals strong end to 2016. Price pressures at 5 year high https://t.co/1QSHWA54lr pic.twitter.com/xNx0xTWpaa

9.05am GMT

European stock markets are taking the Fed rate hike in their stride this morning - not surprising, really, as it was widely expected.

The German DAX and the French CAC have risen by around 0.4%, reflecting the drop in the euro vs the US dollar (good news for exporters).

The dollar has rallied, the yield curve has flattened and the equity of the large US money centre banks, which profit most from a rising Fed funds, are out-performing a weak stock market.

Banks may well ease lending conditions in response to higher margins, and if corporate optimism feeds through to a tighter labour market and wage increases, final demand may prove as immune to higher interest rates as it did to ever lower global policy rates in recent years

8.53am GMT

Bad news from Wigan -- 100 jobs have been lost as a biscuit maker at the Northern town's goes into administration.

Sky News's Mark Kleinman has the story:

The maker of 'Pink Panther' wafers sold in British supermarkets will be the latest food producer to blame a Brexit crunch when it announces on Thursday that it has fallen into administration.

Sky News understands that the owner of Rivington Biscuits", which is based in Wigan, Lancashire, will blame the post-EU referendum slump in the value of sterling for drivng up input costs in recent months.

The maker of 'Pink Panther' wafers is going into administration and will blame #Brexit, says @MarkKleinmanSky https://t.co/2aDfMjdBIQ

8.40am GMT

Newsflash from a chilly Bern: The Swiss central bank has left interest rates unchanged at their current record low of minus 0.75%.

In the UK, the economic impact of the Brexit decision has so far proved less pronounced than originally feared.

The SNB expects the moderate pace of global growth to continue in 2017. The baseline scenario for the world economy is still subject to considerable risks, however. Structural problems in a number of advanced economies could negatively affect the outlook. Added to this are a multitude of political uncertainties which are particularly associated with the future course of economic policy in the US, upcoming elections in several countries in the euro area as well as the complex and arduous exit negotiations between the UK and the EU.

Full SNB Statement: https://t.co/kNPUrguOTZ

8.35am GMT

Government bonds are being pummelled in early trading - as they suffer from the Federal Reserve's decisions.

With prices sliding, the interest rate on UK 10-year gilts has jumped to 1.52%, up from 1.38% yesterday. That's the highest yield since May, before the Brexit vote.

Global bond rout deepens w/ 10y French yields jump by >10bps. pic.twitter.com/HRBx6RRg8K

As was perhaps to be expected, markets took some umbrage at the dot plot's implication of one additional rate hike in 2017.

8.14am GMT

Reuters' Jamie McGeever shows how the US dollar has strengthened sharply over the last two years:

Dollar hits a 14-year high after US rate hike, +30% since 2014. pic.twitter.com/Hy9ZELJ8RQ

8.10am GMT

The dollar rally has hit shares across emerging markets this morning.

Traders are bracing for a surge of capital out of developing countries and back into US assets, to benefit from higher interest rates. So that's driven most Asian markets into the red:

8.01am GMT

The US dollar has surged to a 14-year high against other currencies this morning, after the Federal Reserve raised American interest rates last night.

In volatile trading, the dollar index (the broad measure of the currency's strength) hit its highest level since 2003.

Related: Janet Yellen: US interest rate rise 'vote of confidence' in economy - as it happened

"This is flat out hawkish, and the US dollar is reacting accordingly,"

"I thought we would be calling the Yellen bluff this morning, as the market had expected at most a subtle shift in Fed language.

Related: US dollar surges to 14-year high as Fed hints at three rate hikes in 2017

Markets were jolted by the FOMC moving its dot plot showing 3 hikes, from 2, in 2017. A year ago year it predicted 4 in 2016 -it did 1.#Fed pic.twitter.com/sR3LbbqNtP

7.45am GMT

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

Related: Mark Carney: we must tackle isolation and detachment caused by globalisation

Highlights include SNB, Norges Bank, BoE rate decisions, US CPI, Philadelphia Mfg Index, NY Empire and Weekly Jobs

Related: Greece on collision course with lenders as ESM freezes debt relief

Greek MPs vote today on Tsipras's fiscal 'xmas gifts'. Another escalation, after y'days rebuke by agroup. https://t.co/Jq1f8kHIiv via @WSJ