Summary

  • The US Federal Reserve raises interest rates by 0.25%

  • Fed expects future rate increases to be 'gradual'

  • US shares rise after rate decision

  • UK unemployment falls to the lowest in nearly 10 years

  • Dixons Carphone shares rise on results and a hike in the dividend

Live Reporting

Russell Hotten

  1. US shares rally after Fed rate hike

    NYSE tradersReuters

    Wall Street's main share markets jumped more than 1% after the Federal Reserve announced the first interest rate hike since 2006 and promised a gradual approach to future rate rises.

    There was a time when mere suggestions that the central bank was considering a rise would send markets into reverse.

    But today's announcement and news conference from Fed chair Janet Yellen was broadly welcomed by investors. At the close the Dow Jones was up 1.3%, while the broader-based S&P 500 rose 1.4%. The Nasdaq was 1.5% ahead.

  2. Fed hike gives Bank of England room to act, says IoD

    The Federal Reserve’s decision to start normalising interest rates is a welcome sign of the central bank’s confidence in the US economy. For Britain, higher US interest rates give the Bank of England the flexibility to start normalising rates on this side of the Atlantic as well. Since the Fed has acted first, it diminishes the possibility of an increase in UK interest rates upsetting the value of the pound against the dollar – just one more obstacle which could have worried the Bank.

    While inflation is clearly way off the Bank’s 2% target, the Monetary Policy Committee must look past this temporary period of low inflation and act soon. There will always be a thousand possible excuses not to raise rates, but we must take account of the exceptional circumstances in which we find ourselves. "

    James Sproule, Chief Economist, Institute of Directors

  3. US shares rise after rate decision

    S&P 500Bloomberg

    US shares gained ground after the Fed's decision. The chart above shows the S&P 500, which is around 1.5% ahead. Stocks are enjoying their best three-day rally since October.

    The dollar has bounced around, but is currently 0.2% higher against the euro with a dollar buying €0.9172.

  4. It was a long press conference

    Janet Yellen press conferenceGetty Images

    Obviously, such a momentous event justified a lengthy press conference, but even hardened economics hacks were wilting. The BBC's Zoe Thomas writes: "As the last question was asked after more than an hour, two reporters shared a celebratory bumping of their fists lightly under the desk."

  5. Rate rise 'bad news for working families'

    Bernie SandersRe

    Not everyone is thrilled with the Fed's move. Democratic presidential candidate Bernie Sanders says the rate rise will hurt American workers. Sanders is echoing concerns that the US economy is still too weak to handle a rise.

    "When millions of Americans are working longer hours for lower wages, the Federal Reserve's decision to raise interest rates is bad news for working families,'' Sanders said in a statement.

    "The Fed should act with the same sense of urgency to rebuild the disappearing middle class as it did to bail out Wall Street banks seven years ago.''   

  6. Fed willing to study negative rates

  7. Rate rise domino effect

    Associated Press reports that two - at least - major consumer banks wasted no time in raising interest rates on their consumer products, following the Fed's decision to raise interest rates.

    JPMorgan Chase and US Bancorp say that their prime rate would rise 0.25 percentage points to 3.5%, effective tomorrow. A bank's prime rate is the interest rate banks use to price several of its consumer products, including auto loans and credit cards. 

    If a bank raises its prime rate, it means your credit card rate is also rising. 

  8. Yellen: Rate hikes unlikely to be evenly spaced

    Ms Yellen thinks that future rate hikes are unlikely to be evenly spaced, because she thinks the US economy will not progress "sufficiently evenly" to make that possible.

  9. Yellen: Financial system 'more resilient'

    Janet Yellen press conferenceEPA

    Yellen is asked at the press conference about the junk bond market - the risky end of the bond market, which has seen sharp falls in prices recently.

    She seems fairly relaxed about the situation. 

    "We have a far more resilient financial system now" than before the financial crisis, Ms Yellen says.

  10. Yellen: 'Myth' that expansions die of old age

    Ms Yellen thinks that US economic growth still has a way to go, saying that it is a myth that economic expansions "die of old age".

    Just because the current expansion has been going a while does not mean "its days are numbered".

  11. A 'mighty' attempt at normalisation

    Kamal Ahmed
    Business editor

    It doesn't sound like much - but its significance is mighty. The world's largest economy, has decided, finally, to try a touch of 'normalisation'"

    Kamal Ahmed, BBC Business Editor

    More from BBC business editor Kamal Ahmed's here.

  12. Yellen 'surprised' by oil price move

    "I have been surprised by the further down movement in oil prices," says Ms Yellen.

    She says that oil prices just need to "stabilise", to help boost inflation.

  13. Capital Economics: US rates at 2% by year end

    Paul Ashworth, chief US economist at Capital Economics thinks the Fed will have to be more aggressive in the coming months.

    Our view is still that inflation will rebound much more rapidly than the Fed believes in the first half of next year, as the deflationary pressure from lower commodity prices and the surge in the dollar begin to fade, while domestic price pressures continue to build. As a result, we expect the fed funds rate to reach almost 2% by the end of next year. It was always possible that we could be wrong because the Fed dug its heels in on rate increases next year even as inflation rebounded. "

  14. UK will be 'first to follow' Fed

    Markets should welcome the decision to hike US rates as it puts months of uncertainty to one side. We expect the pace of tightening next year to be gradual, with four more hikes in 2016. Although this is more hawkish than the markets currently expect, we believe that the US economy will continue to expand.

    The US interest rate rise is unlikely to influence the timing of the Bank of England’s decision to hike rates. However, it still looks as though the BoE will be the first central bank to follow the US, though the inflation and wage outlook over the next few months suggests they have time to wait. We currently expect the BoE to raise rates in May, followed by a further hike in November.”

    Dean Turner, Economist, UBS Wealth Management

  15. Yellen is asked 'why now?'

    Fed chair, Janet Yellen

    During the press conference Janet Yellen is asked why rates have moved higher now, given that there's still global weakness and inflation remains low in the US.

    She says there's been improvement in the labour market and there's reasonable confidence that inflation will move back to 2% over the medium term.

  16. Yellen: Neutral level of interest rate is low

    Fed Chair Yellen says that the neutral level of interest rates is lower than has been historically the case and is only likely to rise gradually.

    The neutral level of interest rates is the one which would not spur economic growth, or slow the economy down.

  17. More rises to come

    Prof Linda Yueh and the BBC's former economics editor tweets:

  18. Yellen: Overseas risks 'have lessened'

    Fed Chair Yellen: "Economic activity will continue to expand at a moderate pace."

    Risks from abroad "appear to have lessened since the summer".

  19. Yellen: 'Significant improvement' in labour market

    Fed chief Yellen: "The labour market has clearly shown further significant improvement [this year]."

  20. Market reaction

    BBC business editor Kamal Ahmed tweets: