And finally, here’s our economics editor Larry Elliott on today’s Fed rate cut:

The US central bank has cut interest rates for the third time this year in an attempt to keep the longest running period of growth in the country’s history continuing into the crucial election year of 2020.

But the Federal Reserve put itself on a potential collision course with Donald Trump when it signalled to the financial markets that it had no immediate intention of cutting the cost of borrowing further.

The president has put intense pressure on the Fed to boost the world’s biggest economy and his own re-election prospects by making aggressive cuts in the cost of borrowing.

But the central bank’s chair, Jerome Powell, said there was a limit to what the Fed could do and that a more effective way to stimulate activity would be for Congress to loosen fiscal policy through spending increases or tax cuts.

Here’s the full story:

Goodnight! GW

Ding ding! Wall Street has closed at a new all-time high, as traders welcome today’s cut to US interest rates.

The benchmark S&P 500 index scaled new peaks -- up 10 points, or 0.3% to 2,046, a new record closing high.

The Dow Jones industrial average moved closer to its own record high too; gaining 116 points, or 0.4%, to 27,188.

But we’ll only know in the future if the Fed made the right call today.

Edward Moya of trading firm OANDA says Powell may have blundered by saying rates are now in a ‘good place’, rather than leaving space for further cuts.

The Fed pretty much signaled they are in pause mode and will wait to see if we continue to see positive developments with the US-China trade war. The outlook on the economy was upbeat and this was unnecessary as they have given many hawkish hints that they could be closer to bending back toward rate increases. Inflation is anchored, albeit somewhat firmer recently, but nowhere near running the risk of running hot.

Powell delivered a hawkish cut that has pretty much locked the Fed into keeping the rates on hold in December and possibly into the spring, despite huge geopolitical risks from the trade war and Brexit. A lot could go wrong in a moments notice and this may go down as huge policy mistake.

Q: Does America risk a ‘Japanification’, if low interest rate expectations become entrenched?

There are powerful disinflationary pressures in the world economy, and the US isn’t exempt, Powell replies.

The Fed takes this risk “very seriously”, so will use policy to keep inflation close to 2%, he adds.

Q: Might you raise interest rates in 2020 if the US-China trade war was resolved?

An easing of trade tensions would have a positive impact, Jerome Powell replies.

But the impact probably wouldn’t be immediate.

He repeats that any interest rate rises will be dependent on inflation. So with core inflation just at 2% (the Fed’s target), the pressure isn’t there yet.

Jay Powell, chair of the US Federal Reserve, is holding a press conference now to explain today’s decision.

You can watch it live here:

Here’s some instant reaction to the cut in US interest rates:

Richard Flynn, Managing Director at Charles Schwab:

“Today’s rate cut will provide a much-needed boost to the US economy, as the global slowdown continues to bite. However, as has been proven by the lack of positive recent economic data, subdued consumer confidence and even weaker business confidence, we continue to believe rate cuts are not the elixir for what ails the economy.

“Despite the cut, investors should not ignore ongoing macroeconomic risks, as geopolitical tensions remain unresolved. Trade war, Brexit, and the disruption in Hong Kong pose significant threats to the US economy. Further, the manufacturing sector’s deterioration in September, along with weakness on the services side, and dysfunction in Washington have kept stocks within a tight trading range.

Candice Bangsund, Vice President and Portfolio Manager, Global Asset Allocation, Fiera Capital:

“As widely expected, the Fed met the market’s expectations with a 25 bps cut. The accompanying statement conveyed a subtle compromise for the hawks and the doves regarding the future trajectory for policy.

In a surprising hawkish-leaning development, the Fed removed the statement that policymakers will “act as appropriate” – though the Fed cushioned the blow somewhat and reinforced that policymakers are not on a preset path and will continue to monitor income economic data.

Michael Swell, Co-head of Global Fixed Income Portfolio Management, Goldman Sachs Asset Management:

“Central banks have contended with an unusual environment proactively over the past year, with policy responding to a trade shock as well as continued low inflation and tight labor markets.

Following today’s rate cut, we think insurance has been delivered to markets and the Fed’s policy path now depends on the evolution of US economic data and US-China trade relation

Here’s the full statement from the Federal Reserve, explaining why policymakers have cut borrowing costs today (by 8 votes to 2) to a 1.5%-1.75% range.

As you can see, the Fed believes the US jobs market remains strong, and household spending is growing too -- but business investment and exports are weak.

So, with inflation muted, the Fed feels a rate cut is justified.

Federal Reserve issues FOMC statement

Information received since the Federal Open Market Committee met in September 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 remain weak. 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 1-1/2 to 1-3/4 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. The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. 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 Federal Reserve has also signalled that it may pause its rate-cutting cycle soon.

It has adjusted the language in its monthly statement, and dropped a pledge to “act as appropriate” to ensure that the US economic expansions continues.

Instead, the Fed now says it will “monitor the implications of incoming information for the economic outlook”.

That sounds like a softer commitment... Donald Trump may not be happy....

Newsflash: The US Federal Reserve has cut interest rates, by a quarter point.

America’s central bank has lowered the target range for its key interest rate by 25 basis points to between 1.5% and 1.75%.

That’s down from 1.75%-2% previously.

More to follow!

Tension is building in the markets ahead of the Federal Reserve’s decision on interest rates, in 10 minutes.

Investors widely expect the Federal Reserve to ease monetary policy, given concerns that the US economy may be slowing -- and heavy pressure from the White House.

However, today’s GDP report has shown that America is still expanding at a steady rate - almost 2% per year.

That means the Fed may deliver a ‘hawkish cut’ - lowering borrowing costs while hinting that rates won’t be cut much lower...

Time for a quick recap, before the drama of the Federal Reserve decision (at 6pm UK time or 2pm East Coast).

• America’s economy has grown faster than expected. GDP expanded at an annualised rate of 1.9% in July-September, very slightly slower than the 2% recorded in April-June.
  
  
• But while consumer spending rose, business investment contracted for the second quarter in a row . This pulled quarterly growth to its second lowest level of the Trump era.
  
  
• France’s economy also beat forecasts this morning, with quarter-on-quarter growth of 0.3% in Q3. Economists believe the French economy is outpacing the rest of the eurozone.
  
  
• The Economist Intelligence Unit predicts that Germany is falling into recession, while the UK may manage some growth in the last quarter (we’ll find out next month!).
  
  
• Worryingly, economic and consumer confidence in the euro area has fallen to its lowest level in several years, as households and businesses grow more pessimistic.
  
  
• The French owner of Peugeot and Vauxhall are in merger talks with US-Italian carmaker Fiat Chrysler. UK unions worry that Vauxhall’s factory in Ellesmere Port, in the North West of England, could be affected.

Donald Trump’s council of economic advisors is tweeting about today’s GDP figures:

Wall Street’s reaction to the growth figures? A weary shrug.

The main indices are barely moving in early trading, with the Dow up a mere 0.01% or 2 points at 27,073.

Traders are keeping their powder dry until they’ve heard from America’s central bankers tonight (although surely a rate cut is nailed on)?

There are some big movers, though. General Electric has jumped almost 9% after beating earnings forecasts today and raising its forecasts.

Shares in toymaker Matttel have surged by over 20%, after it also beat forecasts overnight. It also announced that an investigation into accountancy errors had cleared its outside auditors; the firm’s CFO is stepping down, though.

Newsflash: The US economy grew faster than expected in the last quarter....but business investment has fallen again.

US GDP grew at an annualised rate of 1.9% in July-September, the Commerce Department says. That’s down from 2% in April-June, but better than the 1.6% expected.

It’s the equivalent of quarterly growth of almost 0.5% - faster than France, and much faster than expected in the eurozone or the UK.

The report shows that consumer spending growth slowed, to 2.9% down from 4.6% in Q2.

In a worrying sign, business investment contracted by 3%, following 1.0% drop in Q2, with companies cutting back on new equipment.

But there’s encouraging news too - exports rose by 0.7%, following a 5.7% slump in April-June. Imports rose by 1.2%, having been flat in the previous quarter.

Reaction to follow.....

In a worrying development, economic and consumer confidence has fallen across Europe.

The EC’s Economic Sentiment Indicator (ESI), released this morning, fell by 0.9 points to 100.8 in the euro area, and by a similar amount in the EU to 99.0.

These are the weakest readings since 2015, suggesting the region’s economy is struggling - despite France holding up well.

The EC found that confidence across industry, services, retail trade and among consumers all fell this month - although it did rise across the construction industry.

Here’s the damage:

• Industry confidence (-0.6): managers were more pessimistic about production expectations.
  
• Services confidence (−0.5): managers were gloomier about their past business situation and demand expectations.
  
  
• Consumer confidence (−1.1): There was a strong deterioration in households’ expectations about the general economic situation and their future financial situation; plus small declines in their assessments of their past financial situation and their intentions to make major purchases

At least four EU countries are at risk of recession by the end of year.

That’s according to the Economist Intelligence Unit, whose latest Global Forecasts predict that Germany will formally enter recession when its third-quarter GDP figures are released in November.

The UK, Italy and Finland are also perilously close to recession, the EIU adds, while France looks healthier (as we saw this morning).

The EIU says:

Most EU economies will also grow sluggishly: we expect Italy’s economy to remain flat, and that of the UK to grow by only 0.1% as Brexit-related uncertainty continues to take its toll on business investment.

The bright spot in Europe continues to be France, which should continue its run of being the fastest-growing major EU economy.

It also predicts:

• Canada and the US will be the fastest-growing G7 economies in Q3 of 2019, with GDP growth expected to come in at 0.4%
  
• Japan faces recession risk, with a predicted fourth-quarter growth rate of -0.5%
• Of the G7 and BRICS economies, only India and the UK are expected to post third-quarter results that show an acceleration from Q2.

Newsflash: Germany’s unemployment total has risen, and by more than expected too.

The number of people out of work in Germany rose by 6,000, on a seasonally-adjusted basis.

Economists had expected an increase of 2,000 to 3,000, as German factories (such as carmakers) cut workforces in the face of falling orders.

Detlef Scheele, the head of Germany’s Labour Office, says:

“The recent economic weakness is leaving its marks on the job market. But all in all, it still proves to be robust.”

The jobless rate held steady at 5.0% - slightly above the record-low of 4.9% reached earlier this year.

More to follow....

Here’s Reuters’ take on France’s better-than-expected growth figures:

French economic growth defied expectations for a modest slowdown in the third quarter, expanding instead at the same 0.3% pace from the previous quarter, the INSEE national statistics office said on Wednesday.

The resilience in French gross domestic product will be good news for President Emmanuel Macron, at a time of concerns about a global slowdown brought about by international trade disputes which have hit the nation’s main trading partner Germany hard.

A poll of analysts surveyed by Reuters had forecast 0.2% growth for the euro zone’s second-largest economy in the three months to end-September.

Philippe Waechter, an economist at Ostrum Asset Management, said growth was supported by the government’s injection of public funds to boost households’ spending power.

“This is important in a risky international context,” he said.

Domestic demand was the main driver of growth, adding 0.5 points in the third quarter, while trade subtracted 0.4 points and inventories made a small 0.1 point contribution.

French households’ spending picked up, growing at a 0.3 percent pace in the third quarter after expanding 0.2 percent in the previous three months, while business investment slowed to an increase of 0.9 percent this quarter from a 1.2 percent gain. The negative contribution from trade reflected a faster increase in imports than exports.

There’s also a big merger brewing in the auto sector.

France’s PSA Group, which owns Peugeot and Vauxhall, is in talks with Fiat Chrysler Automobiles (FCA) about a merger that would create one of the world’s biggest carmakers.

Here’s the full story:

This chart shows how net trade dragged France’s economy back, despite decent growth in consumer spending, inventories and gross fixed capital formation (investment):

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

France’s economy has defied the doubters by growing faster than expected, despite signs of a global slowdown.

The eurozone’s second-largest economy expanded by 0.3% in the third quarter of 2019, new official figures show.

That’s faster than the 0.2% expected, and matches the 0.3% recorded in April-June.

INSEE, the national statistics office, reports that household spending accelerated over the summer. It rose by 0.3% in July-September, up from 0.2%, as consumers kept the economy ticking over.

However, net trade had a negative impact on growth. That’s because imports jumped by 1.4% (having shrunk 0.3% in Q2), while exports only rose by 0.3% (up from 0.1%). A sign that trade conflict is hurting, perhaps.

But with companies continuing to invest (+0.9%, down from 1.2%), and restocking their inventories, the overall growth rate remained steady.

On an annual basis, France’s economy has only grown by 1.3% over the last year. That’s hardly spectacular.

But at a time when the eurozone is struggling, and the world economy is slowing, president Emmanuel Macron may be quite content with today’s data.

More to follow.....

Also coming up today

We don’t get Q3 GDP data from Germany until next month, but today’s unemployment figures may bolster fears that it is in recession.

New GDP data for America is expected to show growth slowed, as the trade war with China hits demand and confidence.

Then the big event, the Federal Reserve decision. America’s central bank will probably vote to cut interest rates for the third time this year, to a 1.5% to 1.75% range.

Fed chair Jerome Powell will then hold a press conference, where he’ll probably field more questions about the state of the economy, inflation expectations, and recent liquidity shortfalls in the money markets.

He’ll also be asked about the stream of attacks from Donald Trump (who keeps claiming the Fed is clueless).

The agenda

• 8.55am GMT: German unemployment total for October - expected to rise by 2,000
• 10am GMT: Eurozone economic, business and consumer confidence figures for October
• 12.30pm GMT: US GDP for Q3 2019:
• 6pm GMT: Federal Reserve monetary policy decision
• 6.30pm GMT: Fed chair Jerome Powell’s press conference