We’re still waiting for Donald Trump to react to the Fed’s rate hike, despite his repeated warnings.

All is quiet on @realDonaldTrump though.

If that changes, we’ll be back... Otherwise, goodnight! GW

Here’s Geoffery Yu, Head of the UK Investment Office at UBS Wealth Management, on the sell-off:

“Despite the Fed’s initial announcement to hike interest rates being broadly in line with market expectation, there was hope for it to be slightly more accommodative. Markets have subsequently struggled, following Chairman Powell’s press conference.

Powell’s comments that “policy does not currently need to be restrictive” has been interpreted that the Fed is not looking at an immediate pause.

Here’s an unwelcome record for Jay Powell - he just triggered the biggest sell-off after a rate hike in almost 25 years.

Capital Economics agrees that the Federal Reserve could have been rather more dovish.

Here’s their take:

The Fed hiked the fed funds target range by 25bp today, to between 2.25% and 2.50%, as most still expected, but tempered the move by slightly revising down Fed officials’ projections for additional rate increases in 2019 and beyond.

Still, with the vote unanimous and the median rate projection for end-2019 revised down by only 20bp, this was hardly the “dovish hike” that some were anticipating.

Key point: Shares aren’t falling because the Fed raised interest rates. That was priced in.

Instead, they’re falling because chair Jerome Powell indicated that they’ll keep hiking if the data justifies it......despite signs of a global slowdown.

It’s early days, but it looks like European stock markets are going to fall tomorrow.

Britain’s FTSE 100 is currently expected to fall around 85 points, according to the futures market at IG, near to a two-year low [reminder, it gained 64 points today]

My colleague Dominic Rushe has covered the Fed’s rate hike, and chair Powell’s press conference, here:

I said earlier that this was a dovish hike.

Actually, it looks more like a dovish-ish one.

Although the Fed has lowered its predicted path of rate increases, it has signalled that it won’t be deterred by a bit of market volatility, and that it expects growth to continue next year.

As Melanie Baker, senior economist, at Royal London Asset Management, puts it:

The Federal Open Market Committee (FOMC), as expected, raised rates 25bps, with their projections implying one fewer rate rise next year. However, the signals sent in the statement and forecasts weren’t as dovish as we had expected, e.g. only making a small adjustment to their language around “further gradual” hikes (by adding the word “some”). A more cautious signal from the Fed could have been justified (and would have been welcomed by equity markets) given the tightening in financial conditions and weaker global growth backdrop.

However, the domestic economic data has looked strong enough to suggest that we aren’t at the peak of the rate cycle quite yet.

Bob Baur, chief global economist at Principal Global Investors, thinks the Fed is being too relaxed about recent market volatility:

The Fed raised rates as expected, but I think the Fed may be underestimating other factors at play. Trade has been making headlines, but I think a gradual tightening of monetary policy has been the driving force behind recent market volatility. With corporate borrowing and spending still high, and the Fed continuing to reduce its balance sheet, I’d expect volatility to remain if this tightening continues.

“I still think there is a disconnect between Main Street and Wall Street. A general consensus is that a market downturn signals an upcoming recession, but most underlying data points are still healthy and the economy is robust. Just the other day we saw data signalling strong consumer spending, which is one of a few points that tell me the real economy is doing well.

“I also think the Fed missed the significance around the tightening of financial conditions beyond their activity. The stock market is down, credit spreads are way up, bank stocks are plunging and the dollar is stronger. I think markets would have applauded the Fed signalling a pause next year to see how markets have been adjusting to their previous rate decisions.

Michael McDonough of Bloomberg has pinpointed the moment when US stocks got a chill from Powell....

Finally, a question on Brexit.

Jerome Powell thinks the US financial system is well-prepared for whatever happens, whether the UK leaves the US with a transition deal, or without one.

But the Fed will be watching closely, as Brexit is a big issue and something that’s not happened before.

That’s the end of the press conference.

Jerome Powell reiterates that the Fed expects solid growth in 2019, with declining unemployment.

That sounds like conditions that would justify further rate hikes next year, which is why shares are diving in New York.

Chair Powell is having quite an impact....

The sell-off is gathering pace!

Next year, the Federal Reserve will hold a press conference after every meeting (rather than every other meeting).

That will be a “big gain” for communication, Jerome Powell says.

It also means that the Fed could raise rates more easily at any of its eight meetings (rather than resisting policy changes at non-press conference meetings)

Q: Donald Trump wants you to ‘feel the markets’, so what feelings are you getting?

Powell plays down the idea that he should be fixated on the stock exchange.

What matters to the economy is changes in a range of markets. A little volatility doesn’t leave a mark, he adds.

If you speak to American companies, you hear that they’re worried about growth prospects, Jerome Powell says.

Stocks are now falling sharply in New York.

The Dow is now down 1%, or 256 points, having been UP 300 points before the Fed’s announcement.

Q: Are you worried about Donald Trump’s statements, and tweets, about the Fed?

I’m not worried, Powell replies; he knows everyone at the Fed will keep on doing their job.

He explains that the Fed speaks to hundreds of people, and looks at masses of data, before setting monetary policy.

Q: How can you tell if the Fed has become a drag on the economy?

Powell says the Fed expects decent growth in the US economy next year, of between 2% and 2.5%. So it’ll be watching the data closely to see if that plays out.

There is a “fairly high degree of uncertainty over the path and destination of any further interest rate increases” Powell reiterates.

Translation: Those two hikes expected in 2019 are NOT set in concrete.

Onto questions, starting with one about recent softening in US inflation data.

Chair Powell says this gives the Fed the flexibility to be patient.

Jay Powell is now explaining that the Fed’s future decisions aren’t pre-determined.

Any future policy changes will depend on the data, he says.

The US dollar is bouncing around as Powell speaks....

Powell says most of his colleagues expect the US economy to perform well in the coming year.

But they have cut their inflation projections, due to recent ‘tightening in financial conditions’ and slower growth abroad (the eurozone, for example, only grew by 0.2% in the last quarter, with Germany contracting)

Jay Powell says that the Fed has lowered its forecast for economic growth next year. That’s why it now expects two more interest rate hikes in 2019, down from 3 before.

A nice summary:

The S&P 500 index - a broader measure of US company values than the Dow - is now in the red, down 0.4% at 2,536 points.

That underlines that the Fed has disappointed Wall Street by not being more dovish.

You can read the Fed’s statement online, here. We’ll hear from Jerome Powell shortly....

The Federal Reserve has also added a line about monitoring “global economic and financial conditions” to its statement.

That suggests Fed governors are more worried about the state of the world economy, and the recent volatility in the markets.

The US stock market is falling sharply, losing almost all of its earlier gains.

The Dow, which was up almost 300 points, is now only 39 points higher.

That suggests investors had expected the Fed to be more dovish. Some in the market will be disappointed that policymakers still expect two rate hikes next year.

The Fed is justifying its rate hike, by pointing out that the US economy looks robust.

It says:

Information received since the Federal Open Market Committee met in November 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 remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year

Significantly, the Fed has also change the language in its statement.

It now only expects “some” further interest rate rises in future.

With just a few minutes to go, the Dow is up 1.2% or 285 points at 23,960.....

Stocks, bonds and the dollar could all be volatile today, when the Fed decision hits the wires.

John Hardy of Saxo Bank says the stakes are high for chairman Powell and colleagues...

White-knuckle equity market declines, a hedge fund legend and President Trump are all begging Fed chair Jay Powell to cease and desist with further rate tightening ahead of today’s pivotal FOMC.

Will he pause or plough ahead?

We find out in just 10 minutes....

The Fed may well deliver a ‘dovish hike’ today -- raising borrowing costs, while sounding less optimistic that rates will keep rising.

Fiona Cincotta of City Index explains:

We are expecting a dovish hike from the Fed, with the well-used phrase “gradual further hikes” to be dropped from the statement. Furthermore, we expect the Fed to trim is forecast of further hikes. The Fed will have to strike a balance between addressing the current strength in the economy (GDP 3.5% yoy Q3) and taking onboard signs of a slowing global economy.

Additionally, they will need to do this in such a way that it doesn’t alarm financial markets. The fact that US equity indices are moving convincingly higher again today shows that the traders are expecting the Fed’s message to soothe volatile markets.

European stock markets have closed higher tonight.

The FTSE 100 gained 64 points, or almost 1%, to 6,765, recovering from its lowest close in two years on Tuesday.

GlaxoSmithKline led the rally, ending the session almost 4% higher after announcing its consumer healthcare tie-up with Pfizer.

Tim Gamble, Global Head of Pharma Consulting at the Economist Intelligence Unit, says:

What this deal means is a concerted pivot towards innovation and decoupling of the consumer healthcare business. The hook up with 23andMe, appointment of Hal Barron to R&D gives insight into the innovation strategy pursued by Chief Executive Emma Walmsey.

This places greater strain on the Pharma division - but it’s external regulatory constraints that may yet place the drag on Walmsey’s ambitions.”

Italy was the stand-out performer today, gaining 1.6% after reaching a compromise with the European commission over its 2019 budget.

The German DAX gained 0.4%, while France’s CAC rose by 0.6%.

With just over an hour to go until the US interest rate decision, stocks are up on Wall Street too.

The Dow Jones industrial average is up 275 points at 23,950, a gain of 1.1%.

But that could unravel if the Fed is more hawkish than expected tonight....

Back in London, cab hire company Uber has lost another legal attempt to prevent its UK drivers being classed as workers, rater than self-employed.

The Court of Appeal has has upheld an earlier ruling, in 2016, that drivers were effectively employed by Uber, and thus entitled to holiday pay and the minimum wage.

TUC General Secretary Frances O’Grady says it’s an important decision:

“No company is above the law. Uber must play by the rules and treat its staff properly.

“Today’s ruling should be a warning to other gig economy employers. If you play fast and loose with workers’ rights, unions will expose you and hold you to account.

Jonathan Chamberlain, partner at law firm Gowling WLG, says other companies should take note:

Yet another court confirms that the more a brand seeks to control the activities of the people that deliver that brand’s services to the public, the less likely those people are to be self-employed.

The law will probably always remain uncertain in this area, despite the governments promise of reform, but the direction of travel is clear.

I expect the Supreme Court to uphold this judgement but we shall see.”

Wall Street is open, but traders are keeping their powder dry, ahead of the US interest rate decision....

Here’s our news story on the slowdown in UK house price growth, and the dip in consumer price inflation.

Here’s Dan Tomlinson from Resolution Foundation on the slowdown in UK house price growth:

Alastair Neame, senior economist at the CEBR thinktank, also predicts that inflation will keep falling in the months ahead, as retailers fight for business.

“Lower inflation is another welcome sign that household finances will continue to improve over the coming months, but low confidence and consumer indebtedness look set to keeping spending in check.“

Today’s inflation report also shows that clothing prices have fallen by 0.8% in the last year -- the only thing that has actually got cheaper since November 2017.

Tom Stevenson, investment director at Fidelity International, reckons Brexit angst is pulling inflation down, as retailers are forced to slash prices.

“Brexit uncertainty and flagging consumer confidence are showing up in increasingly soggy data, with inflation hitting lowered expectations this morning. Retailers are being forced into heavy discounting to persuade shoppers to open their wallets, offsetting the inflationary impact of the weaker pound. Clothing was a notable drag.

“However, it’s not all bad news as last week’s ONS earnings data showed that UK wage growth has risen to a healthy 3.3%. UK households are getting progressively better off.

UK inflation is clearly on a “downward trend,” says Mike Jakeman, senior economist at PwC.

That’s a boost to workers, as earnings are expected to keep rising this year (although a disorderly Brexit could change that!).

Jakeman says:

“Consumer price inflation slowed in November, to 2.3% year on year, from 2.4% in October. This was the slowest pace of increase for 20 months and was driven by the effect of lower global oil prices, which reduced the cost of a tank of fuel for British motorists by an average of 2.6 pence a litre in the past month. But even setting the aside the effects of volatile components such as fuel, it is clear that inflation is on a downward trend.

Both headline and core inflation measures have steadily slowed during 2018, as the effect of a weaker pound has diminished and economic growth has remained tepid.

At 2.3%, inflation is moving close to the Bank of England’s target.

Jeremy Thomson-Cook of foreign exchange firm World First says:

“Inflation is moving back towards the Bank of England’s target of 2% and allowing real wages gains to extend into the end of the year.

The main pressure within the CPI basket is naturally fuel given the precipitous falls we have seen in the cost of a barrel of oil but food prices have also been kept in check ahead of the Christmas period.

The BoE might be relieved to see inflation dropping. On the other hand, as Geoff Tily of the TUC points out, it might fear that last summer’s rate hike was a mistake:

The drop in inflation means UK wages are outpacing the cost of living.

Average earnings are currently rising 3.3%, meaning real wages are growing by around 1%.

Italian bonds and stocks are rallying this morning, on relief that Rome has reached a peace deal with Brussels over its budget.

Last night, the Italian Treasury announced it had reached a “a technical agreement with EU officials” which could avoid an “excessive deficit procedure” being launched against the eurozone’s third-largest member.

Last week, Italy proposed cutting its planned budget deficit for 2019 to 2.04% from 2.4% of gross domestic product. That might keep it within EU rules -- and compares favourably with France’s aims...

Any deal still needs the approval of European commissioners, who meet later today. Plus, any budget changes would need to be passed by the Italian Senate.

But the markets are already excited, sending the Italian FTSE MIB up 1.5% this morning.

World stock markets have a decidedly edgy feel this morning, as investors wait for the Fed’s rate decision.

China’s Shanghai Composite index has fallen by 1%, amid ongoing anxiety about trade relations with the US. Japan’s Nikkei has dipped by 0.6%.

European shares are more positive; with the Stoxx 600 up around 0.2%.

The FTSE 100 is bouncing back from yesterday’s selloff, up around 0.35%. GSK are leading the way, as investors hail its break-up plan.

Investors around the globe will be watching Fed chair Jerome Powell tonight, when he explains tonight’s interest rate decision.

Shares could soar, or slide, depending on the guidance that Powell gives for future rate hikes in 2019. Ditto the dollar.

Naeem Islam of Think Markets explains:

Market participants widely expect the statement to be somewhat dovish and the markets believe that going into 2019, the Fed isn’t going to be this aggressive because of the tighter financial conditions. Mr Powell is likely to indicate two or maximum three rates hikes in 2019. For investors, one to two rate hikes would be considered more dovish to neutral but two to three rate hikes would be aggressive because the economic indicators have started to flash warning light with respect to any aggressive monetary policy.

In terms of trading the event, aggressive tone by the Fed would be negative for the equity market and the sell-off may become intense. The Dow Jones may take a nose dive and the move could in the range of 300-500 points. However, a dovish statement could support the equity markets and it would restore some confidence so investors expect about 150-250 points move for the Dow on the back of this.