Here’s a quick summary of what happened today:

• The US Federal Reserve cut interest rates by a sizeable half-point, the first cut since rates hit zero in 2020.

• Though there was much anticipation for the cut, Wall Street opened with a shrug toward the upcoming announcement, staying relatively flat on Wednesday.

• Fed chair Jerome Powell, in remarks after the announcement, said that the cut marks the start of a “recalibration” of Fed policy. For the last two years, the central bank has been focused on price increases. Now, Fed officials see inflation has stabilized and are paying close to the unemployment rate, which has increased over the last few months.

• Powell also responded to criticisms that the rate cut seems politically motivated since it’s happening so close to the election. Donald Trump in particular has suggested that the Fed is politically motivated and that he would want a stronger say in interest rates as president. “We’re going into this meeting in particular and asking what is the right thing to do for the people we serve,” Powell said. “That’s always what it is, it’s never about anything else”.

• Powell also said the likelihood of a recession from his standpoint is low. “I don’t see anything in the economy that suggests the likelihood of a downturn is elevated,” he said.

We’re closing this blog for the day. Thanks for reading.

Powell responded to a question about accusations that an interest rate two months before the election as political motivations, something that Donald Trump has suggested over the last few months.

“This is my fourth presidential election at the Fed and it’s always the same. We’re going into this meeting in particular and asking what the right thing to do for the people we serve. And we do that and we make a decision as a group and then we announce it. That’s always what it is, it is never about anything else,” Powell said.

He also noted that “the things that we do really affect economic conditions, for the most part, with a lag.”

In other words, much of the impacts of this rate cut won’t even be felt until after the election.

Powell is fielding multiple questions about the labor market. One reporter asked why why the Fed thinks the labor market will stabilize around 4.4% when historically, the unemployment rate continues to rise if it goes up at that pace.

“The labor market is in solid condition and our intention with our policy today is to keep it there. You can say that with the whole economy. The US economy is in a good shape. It’s growing at a solid pace, inflation is coming down, the labor market is at a strong place. We want to keep it there. That’s what we’re doing,” he said.

Another reporter asked if Fed officials were too late in cutting rates with rising layoffs. Powell ended up taking a defensive stance, saying that officials are seeing a strong labor market that has cooled from an overheated period.

“The level of conditions is pretty close to what I would call maximum employment,” Powell said. “We’re not seeing rising claims, we’re not seeing rising layoffs and we’re not hearing that from companies.”

When asked whether it seems like there will be another rate cut in the future, Fed chair Jerome Powell said a pretty standard response: “We’re going to be making decision meeting by meeting based on the incoming data, the evolving outlook and the balance of risks.”

But Powell pointed out that the Fed’s economic projections after this meeting point to a “process of recalibrating our policy stance away from where we had it a year ago when inflation was high, unemployment low, to a place that’s more appropriate,” he said.

“There’s nothing to suggest the committee is in a rush,” he added, suggesting officials are still taking a cautious approach. Powell also noted that all 19 Fed officials behind the Fed’s economic projections indicated they expect there to be multiple rate cuts this year.

Fed chair Jerome Powell is delivering remarks right now about the half-point rate cut. Powell suggests, essentially, that the Fed is working toward a so-called “soft-landing” – bringing inflation down without hurting the jobs market.

“This decision reflects our growing confidence that within appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2,%” Powell said.

Powell said that the labor market has “cooled from its formerly overheated state” and inflation has “eased substantially” – a marked difference in tone from press conferences over the last year, where Powell mostly spoke on concerns about price increases.

The Federal Reserve just announced that it’s cutting rates by a half-point, bringing rates down to 4.75% to 5%.

“The committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the Fed’s Open Market Committee said in a statement.

This is the first time the Fed has cut rates since the start of the pandemic, when it dropped rates to zero.

Fed chair is expected to hold a press conference about the rate cut at 2:30 pm ET. Stay tuned.

The Federal Reserve is expected to announce an interest rate cut for the first time in four years at 2pm. Many economists see this moment as the end of an era, and the beginning of the end of the central bank’s fight against inflation.

It primarily looks at two things when considering the interest rate: price growth and the labor markets.

Following years of pandemic-related turmoil in the economy, inflation began to rapidly increase. The Fed hiked rates 11 times over a period of about a year and a half, from March 2022 until July 2023, the last time it increased rates.

Since then, inflation has slowed significantly. The labor market has remained strong, but has started to cool.

As the most recent inflation and jobs data seemed to both show cooling, Fed officials started signaling late in the summer that it was time to cut rates.

Construction of single-family US homes rebounded sharply in August, new data shows.

Housing starts – a measure of how many construction projects got underway – jumped by 9.6% in August to an annual rate of 1.356 million units, the Commerce Department’s Census Bureau reported.

The increase was driven by a near-16% jump in single-family housing starts.

The increase suggests building work got underway again last month after Hurricane Beryl disrupted the sector in July.

Just in: A majority of financial experts polled by Deutsche Bank today expect the Fed will only cut US interest rates by a quarter of one-percent.

Ir’s a slighly imprompu poll, conducted by Deutsche’s market strategist Jim Reid since 7am UK time among readers of his morning research note (highly recommended, by the way).

1,400 people took part – and the poll showed that they are expecting an average of 34.4 basis points of cuts today. That’s less than the futures market is predicting [it’s also not going to happen; the Fed will either do 25bo or 50bp].

Reid says:

62% [of respondents] expect 25bps and 38% expect 50bps. This suggests 50bps would be a bigger shock than 25bps to a broader global financial market audience, the opposite way round in terms of biases to what Fed fund futures contracts are telling us.

As flagged earlier, the futures market reckons a 50bp cut is more likely than a 25bp one – so there’s a disconnect between that and the Deutsche survey…

The Wall Street opening bell has been rung, and – as expected – trading had begun calmly.

The S&P 500 index of US stocks has risen by 0.09%, or 5.2 points, to 5,639.8 points, towards the record high set earlier this week.

The tech-focused Nasdaq index is almost 0.2% higher.

But the Dow Jones industrial average, which tracks 30 large US companies, dipped by 0.04% at the open.

My colleague Lauren Aratani has analysed the impact of a cut to US interest rates, here:

Although Wall Street looks subdued, investors are expecting a cut to US interest rates today, and possibly a large cut.

According to CME’s Fedwatch tool, there’s a 65% chance that the Federal Reserve cuts US interest rates by half a percentage point today.

That leaves a 35% chance of a smaller, quarter-percentage-point, cut.

Currently, the Fed’s target rate is 5.25%-5.5%.

This level of uncertainty means there’s likely to be a strong market reaction when the Fed announcement is made at 2pm Eastern time (7pm UK time).

You’d have to go back over 15 years to find such an uncertain situation this close to the decision, says Jim Reid, market strategist of Deutsche Bank.

He told clients:

A lot of money will be made and lost today.

I’ve waivered both ways over the last few days and I’m surprised the Fed has left pricing so uncertain at this stage. However in an era of heavy forward guidance it’s refreshing to see a little less certainty. If that was more widespread I think it would be more rather than less helpful.

If you think you know exactly what the central bank will do it is likely to promote more over exuberance in markets which in turn requires a bigger opposite reaction later. I’m sure they’ll be those taking the opposite view though.

The US stock market is on track to open slightly higher in an hour’s time, as traders brace for the Federal Reserve’s interest rate decision later today.

The Dow Jones Industrial Average, the S&P 500 and the Nasdaq are all slightly higher in pre-market trading.

Both the Dow and the S&P 500 touched new alltime highs this week, on hopes that the US economy will achieve a ‘soft landing’ (lowering inflation while avoiding a recession).

Trevor Greetham, head of multi asset at Royal London Asset Management, says Fed rate cuts are bullish for stocks… in a soft landing scenario:

The Federal Reserve is cutting rates for the first time since March 2020. What happens to financial markets in the months to come will depend on the macro backdrop.

Rate cuts amid disinflationary growth are bullish for stocks. If a US recession takes hold however, rate cuts don’t prevent a bear market and you could look to buy stocks on the Fed’s last rate cut, not the first.

There’s a more consistent pattern for government bonds, which typically perform strongly either way.

Newsflash: Train drivers have voted overwhelmingly to accept a multi-year pay deal,

The decision resolves the last remaining conflict between rail operators and unions after two years of strikes that have brought misery for passengers.

Members of the driver’s union Aslef voted overwhelmingly to support the pay offer put forward by the Department for Transport (DfT) last month, which would result in a pay rise of almost 15% over three years.

The approval by 97% of Aslef’s more than 20,000 members brings an end to the union’s dispute with 16 train operating companies in England, which began in July 2022.

Drivers have taken 18 days of strike action since then, resulting in a near complete shutdown of English lines and some cross-border services, as well as a run of overtime bans that have caused widespread disruption.

More here:

Today’s inflation report should ‘“dispel the remaining hopes” held by some in the market that the Bank of England might move on interest rates ahead of its November meeting, say analysts at RBC Capital Markets.

Luke Bartholomew, deputy chief economist at abrdn, agrees, saying:

“It is hard to see this inflation report changing many minds at the Bank of England, with the data coming in pretty much exactly as expected.

Certainly the fact that headline inflation is a touch above target will come as no surprise to policymakers. Of greater focus will be the fact that various measures of underlying inflation are still quite elevated. That helps explains why the Bank of England is likely to be somewhat more cautious than the US Federal Reserve in its easing cycle over the next few months.

Indeed, the Bank of England now looks extremely likely to keep rates on hold tomorrow with the next cut probably coming in November.”

Looking, back at the UK inflation report…. ING have calculated that ‘core services inflation’ dropped last month.

As we reported earlier, service sector inflation jumped from 5.2% to 5.6% in August – but ING’s maths suggests the underlying picture is better.

James Smith, ING’s developed markets economist, explains:

Beneath the surface of the latest UK CPI report, there are signs that the inflation story is slowly but surely moving in the right direction. That might sound weird, given that services inflation rose from 5.2% to 5.6% in August. Remember this is the guiding light for the Bank of England when it comes to rate cuts, and although today’s move was widely predicted, it looks like it is moving in the wrong direction.

Appearances can be deceiving. The fact is that the recent nudge higher in services inflation is largely thanks to base effects and higher inflation in price categories the BoE appears to care less about. We’ve calculated a measure of “core services” inflation, based on something the Bank put in its May Monetary Policy Report.

That excludes volatile categories like airfares, package holidays, and rents, arguably less relevant for monetary policy decisions. If our maths is correct, that’s now fallen to 4.9% from 5.5% just two months ago.

That would please the Bank – although probably not enough to prompt an interest rate cut tomorrow, though….

The company behind the TGI Fridays chain is calling in administrators, a week after a attemped takeover of US-based franchisor TGI Fridays failed.

Hostmore has decided to appoint administrators from Teneo, and will also suspend trading in its shares, whose value has fallen to almost zero.

Hostmore has told the City that it is trying to find a buyer for its sites in the UK, and expects to conclude a sale by the end of September. However, it does not expect to recover enough money to cover its borrowings.

Its sites remain open.

The International Monetary Fund (IMF) has postponed plans to visit Moscow to review the Russian economy, following a backlash from European capitals.

The Tass news service has reported that the IMF has “indefinitely postponed” its first planned consultations with Russia.

According to Tass, Alexei Mozhin, Russia’s director at the IMF, blamed “technical unpreparedness”, saying:

“The Fund’s management notified the Russian side and the board of directors that the mission’s work would be postponed indefinitely.

“Technical unpreparedness of the mission to conduct consultations was mentioned as the reason for postponing the mission.”

Last week, the finance ministers of Lithuania, Latvia, Estonia, Finland, Sweden, Iceland, Denmark, Norway and Poland expressed their “strong dissatisfaction” with the IMF’s plans to visit Russia.

Post Office boss Nick Read is set to step down from the role next year, the company has said.

Read says it has been a “great privilege” to have worked as Post Office chief executive in an “extraordinarily challenging time for the business and for postmasters”, adding:

“It has been a great privilege to work with colleagues and postmasters during the past five years in what has been an extraordinarily challenging time for the business and for postmasters.

“There remains much to be done for this great UK institution but the journey to reset the relationship with postmasters is well under way and our work to support justice and redress for postmasters will continue.”

Today’s announcement comes after more than a year dominated by the fallout from the Horizon IT scandal, in which hundreds of post office operators were wrongfully inprisoned.

In July, Read said he was temporarily stepping back from the CEO role so he could give his “entire attention” to the next stage of the inquiry into Horizon.

Read became CEO of the Post Office in September 2019, succeeding Paula Vennells, who forfeited her CBE for “bringing the honours system into disrepute” over her handling of the Horizon IT crisis.

In February, the business and trade committee of MPs expressed a lack of confidence in Read’s leadership, accusing him of giving misleading evidence.

Read also denied a claim made by the former chair of the Post Office Henry Staunton that he had threatened to resign unless he was paid more. He was “exonerated of all misconduct allegations” following a report into his behaviour earlier this year.

Google has won a legal challenge against a €1.49bn antitrust fine for hampering competition in the online search advertising business.

The Luxembourg-based General Court has annulled the fine, despite also mostly agreed with the European Union competition enforcer’s assessments of the case five year ago.

The judges said:

“The court (...) upheld most of the commission’s assessments, but annulled the decision imposing a fine of almost 1.5 billion euros on Google, on the grounds in particular that it had failed to take into account all the relevant circumstances in its assessment of the duration of the contractual clauses that it had found to be unfair.”

Back in 2019, the EC ruled that Google had abused its market dominance in online advertising, by forcing web publishers not to accept adverts from its rivals or making them reserve the most profitable space on their search results pages for Google’s adverts.

UK tenants continue to be hit by inflation-busting rental increases.

Average UK private rents increased by 8.4% in the 12 months to August, the ONS reports.

That’s down from 8.6% in the 12 months to July, but still almost four times faster than the headline rate of inflation.

The ONS adds:

• Average rents increased to £1,327 (8.5%) in England, £752 (8.5%) in Wales, and £969 (7.6%) in Scotland, in the 12 months to August 2024.

• In Northern Ireland, average rents increased by 9.9% in the 12 months to June 2024.

• In England, rents inflation was highest in London (9.6%) and lowest in the South West (6.4%), in the 12 months to August 2024.

Just in: UK house price inflation has slowed.

The average UK house prices increased by 2.2% to £290,000 in the 12 months to July, new data from the Office for National Statistics shows.

That’s down from 2.7% in the 12 months to June 2024, and is the fifth monthly rise in annual house price infation in a row.

The ONS reports that average house prices increased in England to £306,000 (a rise of 1.6%), in Wales to £218,000 (2.0%), and in Scotland to £199,000 (6.0%) in the last year.

Newsflash: There’s a leadership shake-up at struggling retailer Asda.

Asda has announced that veteran retailer Sir Stuart Rose, currently its chairman, is to lead the business, taking over from co-owner Mohsin Issa, as it tries to reverse a sales decline.

Issa will now focus on running EG Group, the petrol station and convenience store chain which he and his brother Zuber built their fortunes.

Lord Rose, the former CEO and chairman of Marks & Spencer, says:

We respect Mohsin’s decision to move on from his role at Asda where his work is complete to be the sole CEO of EG Group.

We are very grateful to Mohsin for the role he has played in overseeing Asda, including launching into the growth market of convenience stores and introducing a loyalty app now used by more than six million customers. He has laid the foundations to deliver a world-class IT infrastructure, strengthening Asda for the long term. I look forward to continuing to benefit from his insight as a non-executive director on our Board.”

The move comes after Asda lost market against rivals, with sales falling by over 6% in the three months to mid-August.

Rose told the Telegraph last month that he was “embarrassed” by Asda’s performance, and that he would urge Mohsin Issa to permanently step back from the day-to-day running of the business. That urging seems to have come to fruition today.

Asda says Rose will assume Mohsin Issa’s executive responsibilities alongside Rob Hattrell, a partner at TDR Capital, the private equity firm who bought Asda alongside the Issa brothers in 2020.

Following reports, which have been denied, of a rift between the brothers, Zuber sold his Asda stake to TDR this summer.

Asda adds that it is still looking for a CEO to lead the business “in the next phase of its strategy”.

It’s important to remember that although the rate of price rises has slowed this summer, the level of prices is sharply higher than before the cost of iving crisis began.

Darren Jones, chief secretary to the Treasury, makes this point:

“Years of sky-high inflation have taken their toll; and prices are still much higher than four years ago.

“So, while more manageable inflation is welcome, we know that millions of families across Britain are struggling, which is why we are determined to fix the foundations of our economy so we can rebuild Britain and make every part of the country better-off.”

The Bank of England is less likely to cut interest rates tomorrow, the City believes, after this morning’s inflation report showed a rise in core inflation in August.

The money markets show that the odds of the BoE making no change to borrowing costs at noon on Thursday have risen to 73% this morning.

That’s up from 65% before we learned that headline inflation stuck above the Bank’s target in August, at 2.2%.

Monica George Michail, associate economist at research institute NIESR, says the Bank will have noted that underlyinng inflation “remains elevated”, even though headline CPI inflation was unchanged:

“Annual CPI inflation in August remains unchanged from July at 2.2%. Core and Services inflation rates have slightly gone up, after an encouraging fall in July, recording 3.6% and 5.6%.

Given that inflation is set to gently rise towards the end of the year, and that underlying inflation remains elevated, this reduces chances of a rate cut tomorrow, and new developments will be closely monitored by the MPC”

Inflation at the UK factory gate slowed last month, which may feed through to consumers in coming months.

The output prices charged by UK producers rose by 0.2% in the year to August, the Office for National Statistics reports, down from 0.8% in July.

Producers saw their own input prices fall, by 1.1% year-on-year, thanks to a drop in the oil price.

Services inflation accelerated to 5.6% in August, from 5.2% in July, the inflation report shows.

Conversely, goods prices continued to fall, and at a faster rate. The CPI goods annual rate fell from -0.6% to -0.9%.

Worryingly, underlying inflation across the UK has risen.

The Core CPI, which excludes energy, food, alcohol and tobacco, rose by 3.6% in the 12 months to August 2024, up from 3.3% in July.

Economists had expected a smaller rise in core inflation, to 3.5%.

Despite fears of a Taylor Swift effect, hotel and restaurant prices actually fell last month.

Today’s inflation report shows that prices at restaurants and hotels fell by 0.7% in August, compared with July.

This pulled the annual inflation rate for restaurants and hotels down to 4.4% in August 2024, down from 4.9% in the year to July, and the lowest rate since July 2021.

The ONS reports that the prices of various alcohol products at pub and restaurants rose by less than a year ago.

Some economists have suggested that strong demand from Swifties attending concerts this summer could have had an upward affect on inflation, as hotel owners reacted to higher demand by whacking up prices.

In August, Taylor Swift played five dates at Wembley Stadium.

The cost of petrol and diesel fell last month, countering the impact of higher air fares and keeping inflation at 2.2%.

Today’s UK inflation report shows that motor fuel prices fell by 3.4% in the year to August, compared with a rise of 1.8% in the year to July.

According to the ONS, the average price of petrol fell by 2.1p per litre between July and August to 142.3p per litre. That’s down from 148.5p per litre in August 2023.

Diesel prices fell by 2.6p per litre in August to 147.8p per litre, down from 151.1p per litre in August 2023.

ONS chief economist Grant Fitzner says:

“Inflation held steady in August as various price fluctuations offset each other.

“The main movements came from air fares, in particular to European destinations, which showed a large monthly rise, following a fall this time last year.

“This was offset by lower prices at the pump as well as falling costs at restaurants and hotels. Also, the prices of shop bought alcohol fell slightly this month, but rose at the same time last year.

Newsflash: UK inflation remained unchanged last month, above the UK’s official target.

The Consumer Prices Index, which tracks cost changes across the economy, rose by 2.2% in the year to August, data just released by the Office for National Statistics shows.

That means prices are rising a little faster than the Bank of England’s target of 2%.

Shoppers may face a choccy horror show this Halloween after the price of chocolate shot up 11% in the past year – far outstripping increases for other foods across UK supermarkets.

Britons opening their doors to trick-or-treaters could decide to cut back on spending for 31 October, as the cost of chocolate rose sharply in the year to the end of August, way above wider grocery inflation of 2.7% over the same period, according to research by the consumer group Which?

The price has risen after cocoa prices more than doubled on world markets in the face of tree disease and adverse weather in growing countries aggravated by the climate crisis.

While we wait for the UK inflation report… Tupperware, the manufacturer of food storage containers, has filed for bankruptcy protection.

Tupperware announced this morning it has voluntarily begun Chapter 11 proceedings in the United States Bankruptcy Court for the District of Delaware.

Laurie Ann Goldman, president and chief executive officer of Tupperware, blamed a “challenging macroeconomic environment” (costs of raw materials have jumped, and the pandemic boom in home cooking has faded, hurting sales).

Goldman added:

“Whether you are a dedicated member of our Tupperware team, sell, cook with, or simply love our Tupperware products, you are a part of our Tupperware family. We plan to continue serving our valued customers with the high-quality products they love and trust throughout this process.”

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

Inflation and interest rates are top of the agenda today.

Firstly, we’re about to learn how fast prices rose across the UK last month, when the latest official inflation report is released at 7am.

Economists predict the consumer prices index rose by 2.2% in the year to August, matching July’s figure.

That would mean prices were rising slightly faster than the Bank of England’s 2% target, but at a much slower pace than during the height of the cost of living crisis in autumn 2022, when inflation hit 11.1%.

A weak inflation reading might give the Bank of England confidence to cut interest rates on Thursday, while a higher rate would make policymakers lean towards maintaining borrowing costs.

As things stand, the money markets indicate there’s a 65% chance that the BoE leaves rates on hold tomorrow, and just a 35% chance of a cut.

Interest rates across the Atlantic will probably be cut later today – the question is by how much. Investors are split over whether the US Federal Reserve will start its easing programme modestly, with a cut of a quarter of one percent (25 basis points), or go big with a half-point reduction.

Currently, the markets think a bumper 50 basis-point cut is more likely. But we’ll see at at 7pm.

Kit Juckes, currency expert at French bank Société Générale, says:

Is the Fed a hare or a tortoise? Whether we get a 25bp or a 50bp cut from the Fed tomorrow matters less than the destination of rates. Reaching the right destination is more important than how fast you start. Just ask the hare!

The agenda

• 7am BST: UK inflation report for August

• 9.30am BST: UK house prices and rental costs data

• 10am BST: Eurozone inflation report for August (final reading)

• 7pm BST: Federal Reserve sets US interest rates

• 7.30pm BST: Federal Reserve press conference