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  1. Fed raises benchmark interest rate to a range of 0.75% to 1%
  2. US growth forecast at 2.1% in 2017 and 2018
  3. Chancellor in U-turn on National Insurance increase
  4. NI increase did not meet "spirit" of Tory manifesto
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Live Reporting

By Daniel Thomas

All times stated are UK

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Workers face harsh conditions in India's leather industry

Preparing hides
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Around 2.5 million workers are enduring unacceptable working conditions in India's leather industry, making shoes and clothes for Western brands, a study has found. 

The India Committee of the Netherlands (ICN), a human rights NGO, said the workers faced long hours with toxic chemicals for poverty wages. 

It added: "Accidents regularly occur with machine operators getting trapped, workers cleaning underground waste tanks suffocating from toxic fumes, or workers drowning in toxic sludge at the tannery premises." 

India is the world's second largest producer of footwear and leather garments and the majority of its footwear exports go to the EU.

ICN called for more transparency in global supply chains.   

SpaceX gets GPS satellite launch contract

Elon Musk's Space Exploration Technologies has won a $96.5m GPS satellite launch contract over rival United Launch Alliance, a partnership of Lockheed Martin and Boeing.

The GPS launch contracts won by SpaceX cover production of a Falcon 9 launch vehicle, mission integration, launch operations and spaceflight certification, the US Air Force said.

Chancellor 'has a problem' in plugging £2bn shortfall

Simon Jack

Where will the Chancellor find the £2bn to plug the gap from not raising National Insurance rates for the self-employed?

Business editor Simon Jack says he has to find the money to keep to his deficit reduction programme.

"This was a Chancellor... who looked like someone who had both hands tied behind his back... The election promises were that they [the Conservative government] wouldn't raise National Insurance, VAT or income tax. He tried to squeeze one through on a technicality by saying 'Well, I didn't really mean that National Insurance, I meant Class 1 National Insurance' - well, no-one was really having that..."

Simon adds that there are very few sources for him to find the money, and there are lots of ring-fenced areas such as the NHS and education.

"So, he's got a problem."

Regulators to investigate Canadian banks over sales practices

Toronto skyline
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Canada's consumer watchdog is to investigate some of the country's biggest banks over claims their tellers pressured customers into buying unnecessary services.

It follows a report by public broadcaster CBC which uncovered widespread use of possibly criminal tactics to get customers to extend credit limits, sign up for credit cards or make riskier investments that earned the banks higher commissions. 

According to CBC, employees felt pressured by managers to up-sell and even to cheat and lie. 

Shares in major lenders such as Toronto Dominion, Royal Bank of Canada and Scotiabank have fallen since the report was aired last week. 

US markets end higher after Fed rate hike

US traders
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Wall Street stocks closed higher after the Fed raised the benchmark interest rate by 0.25%.

The Dow Jones gained 0.54% to 20,950.10, the S&P 500 rose 0.84% to 2,385.26, and the Nasdaq was up 0.74% at 5,900.05.

The dollar plunged, however, after the Fed said it would stick to a plan to make only three rate hikes in 2017 (including today's).

It shed 1.19% against the euro to 0.93150 euros.

US rates: The slow return to normality

Andrew Walker

World Service economics correspondent

Fed chair, Janet Yellen
Getty Images

Back in the depths of the financial crisis the US Federal Reserve cut its main interest rate to close to zero.

It was an effort to prevent an even more severe economic downturn.

In late 2015, the Fed finally started the slow return towards economic normality - with the first rate rise in almost a decade. 

The next move came a year later and now we have rate rise number three.

Read more.

Fed hikes 'slowing Trump rally'

Donald Trump, TV monitor
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The US stock market rally inspired by Donald Trump's election has slowed somewhat since the Fed's December meeting (when serious talk of an impending rate hike first surfaced) says Kathleen Brooks.

The analyst at City Index says: "The big question now is, can the Trump rally survive with two further fed rate hikes on the cards in the coming months and no sign yet of the Trump administration’s tax cuts or fiscal stimulus plan?

"We believe that markets have the potential for further upside, but another leg higher will not be achieved unless Trump manages to get Congress to agree to an enormous fiscal stimulus plan that can truly boost growth."

What does the Fed's rate rise mean for you?

World Business Report explains

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Trump makes 'longer term outlook unclear'

The White House
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Kully Samra, UK managing director of Charles Schwab, says he expects three rate hikes this year (including today’s) and a further two in 2018. 

However, he says: "If White House plans for deregulation, tax cuts and more government spending are realised, then growth and inflation could be stronger than expected and lead to more hikes. 

"On the other hand, potential border taxes, trade tariffs and tighter monetary policy could slow growth and inflation.”

Separate investment and retail banks?

Janet Yellen , Fed chair

Is a new Glass-Steagall Act - separating retail and casino banks - a good idea? Treasury Secretary Steve Mnuchin has mooted the idea. 

Ms Yellen isn't playing ball. She says she's not sure what a 21st century Glass-Steagall Act would look like. Her reading of the financial crisis is not that unified retail and casino banks caused the thing, she said. 

An important reform in the aftermath of the crisis was making sure investment banks have enough capital, she adds.

Weak wage growth 'holding inflation back '

US construction workers
Getty Images

Neil Wilson of ETX Capital says the Fed's "dovish" approach today is because of lingering doubts about the US economy.  

"There are still meaningful doubts about just how quickly and how far the Fed should raise rates in this cycle," he says. 

"This case is simply based on a lack of wage growth, which holds back inflation."

He adds: "There is consensus around growth picking up and inflation holding near to the 2% level. But overall caution prevailed - household spending is rising only moderately, jobs growth is solid."

Stocks a worry?

Press conference, Yellen
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Fed chief Janet Yellen is now asked about an opinion from the Bank of International Settlements, which says central bankers have ignored asset price inflation, such as fast-rising stock markets.

"We do look at market valuations" including stock prices, she says, but she seems unfazed. 

High stock prices can boost consumption spending, she says. Risk spreads for lower grade corporate borrowers have narrowed, as well, she says.

S&P 500 index climbs

Yellen: 'I have met Trump'

Janet Yellen, Fed chair, and Donald Trump, US president
Getty Images

Has Ms Yellen met Steve Mnuchin, the new treasury secretary, she is asked? 

Yes, a couple of times, she says. "I fully expect to have a strong relationship with Secretary Mnuchin," she says. 

She also had a brief meeting with President Trump, she said.

Inflation surge 'a concern'

Woman shopping
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Anthony Doyle, fixed interest Investment Director at M&G Investments, says markets have "fully anticipated" this decision. 

"The FOMC determined that the US economy needs higher interest rates following the continued tightening of the labour market and building inflationary pressures," he says.

"The surge in headline inflation to a five-year high of 2.7% in February is a concern for the Fed, who will be keen to ensure that inflation expectations remain well-anchored," he adds.  

Expect 'gradual' increases - Yellen

Gradual increases will also be the order of the day so that any "shocks" to the economy can be accommodated without dropping rates again, Ms Yellen says.

"The trajectory you see is the median in our projections," she says, when asked what "gradual" means. Central bankers aren't known for their bluntness.

She says the 2004 days of a rate raise every Fed meeting (every six weeks) is not what she expects.

'Rate likely to hit 3% by 2019' - Yellen

There's still some room for improvement in the job market, but Ms Yellen says she wants to avoid a rapid increase in rates.

She says the federal funds rate will probably be 3% by the end of 2019. That's the rate at which banks lend to each other overnight via the Fed.

US dollar falls

Dollar vs euro chart

The US dollar has fallen after the Fed said it would stick to its plan to make just three rate rises in 2017.

It is 0.55% lower against the euro at 0.93740 euros, and 0.89% lower against the pound at £0.81550.

Business sentiment 'favourable' - Yellen

Fed chief Janet Yellen is delivering her analysis to the press conference. 

Business investment has "firmed somewhat" and business sentiment is "favourable", she said. 

Unemployment is "near a recent low" and "labour market underutilisation" - so-called slack, which depresses wages, is also "low, she said. 

Energy prices are now feeding into inflation and she anticipates 2% core inflation in the next couple of years, she adds. 

Fed predicts 2.1% US growth in 2017 and 2018

The central bank has issued updated forecasts for the US economy, which are little changed. 

Officials are expecting economic growth of 2.1% this year and next, falling to 1.9% in 2019. 

These forecasts are well below the 4% growth that President Donald Trump has said he can produce with his economic policies. 

'Fed faces a tricky path from here'

Janet Yellen, Fed chair
Getty Images

Luke Bartholomew, an investment manager Aberdeen Asset Management, says the Fed faces a "tricky path from here". 

"The question now is how quickly the next few hikes come," he says.

"Over the last few years they’ve consistently overestimated how many hikes they will deliver because the economy has turned out weaker than they expected.

"But now the risk is that the Fed will need to catch up with easier fiscal policy and stronger growth outlook.

"Meanwhile, they’re facing increasingly shrill calls for their independence to be curtailed."

Markets jump as Fed raises rates

Dow Jones chart

The main US share indices have jumped following the Fed's decision to raise interest rates.

As this chart shows, the Dow Jones is now trading 0.48% higher at 20,936.94. 

The S&P 500 and Nasdaq are also up by 0.66% and 0.56% respectively.   

'More rate rises expected' - Fed

US Federal Reserve

It its statement, the FOMC adds: "The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. 

"However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data."  

Job gains 'solid' as inflation rises

Justifying its decision, the Fed pointed to fresh employment and inflation figures showing an economy in strong health. 

It said: "Job gains remained solid and the unemployment rate was little changed in recent months. 

"Household spending has continued to rise moderately while business fixed investment appears to have firmed somewhat. 

"Inflation has increased in recent quarters, moving close to the Committee's 2% longer-run objective; excluding energy and food prices, inflation was little changed and continued to run somewhat below 2%."

Only one FOMC member dissents

All but one member of the Federal Open Market Committee voted for a rate hike.

Only Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate, dissented. 

BreakingUS Federal Reserve raises rates

The Fed, as expected, has raised its benchmark interest rate by a quarter percentage point to 0.75-1%.

It said : "In view of realised and expected labour market conditions and inflation, the Committee decided to raise the target range for the federal funds rate.

"The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labour market conditions and a sustained return to 2% inflation."

US markets climb ahead of Fed rate decision

Janet Yellen, Fed chief
Getty Images

US markets picked up on Wednesday ahead of the end of the Federal Reserve's latest monetary policy meeting. 

The US central bank will make an announcement shortly, and analysts say it is highly likely to raise interest rates - for the third time since 2008 - to reflect the gathering steam in the US economy.

We'll also be getting the latest American inflation and wage figures.

In early afternoon trade the Dow Jones had gained 0.22% to 20,883.43, the S&P 500 was up 0.38% at 2,374.62, and the Nasdaq composite was 0.3% higher at 5,874.22.

No 10: We didn't breach manifesto

BBC assistant political editor tweets...

Number Ten continue to reject suggestion rise in NICS was breach of manifesto.

MP 'in some difficulty' after backing NIC rise

Sir Desmond Swayne amused MPs by recanting an article he wrote in support of the tax increase - before it is even published.

"I'm in some difficulty", he said in the Commons. "My article robustly supporting the Chancellor's earlier policy in the Forest Journal is already with the printer."

The New Forest West MP said he was "persuaded of the correctness" of Mr Hammond's U-turn but that he "merely needed an opportunity in which to recant". 

'Is UK prepared to pay more taxes for public services?'

Douglas Fraser

Scotland business & economy editor

'PM has full confidence in Chancellor'

ITV political editor, Robert Peston tweets:

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'Reducing wasteful spending'

The Conservatives' 2015 manifesto pledge

Our approach is focused on reducing wasteful spending, making savings in welfare, and continuing to crack down on tax evasion and aggressive avoidance. This means that we can commit to no increases in VAT, Income Tax or National Insurance.

'Overriding sense of superiority'

BBC political editor Laura Kuenssberg writes:

Fixing personal injury claims 'would fill NICs shortfall'

Man holding his neck in a car

With the NICs U-turn likely to leave a £2bn hole in the public finances, commentators have been offering the Chancellor ideas about how make up the shortfall.

James Dalton of the Association of British Insurers, said: “The government  can fill the void in its accounts by bringing in a more sensible discount rate used to calculate personal injury compensation. 

"As last week’s Budget confirmed, the ill-judged decision to reduce the discount rate to minus 0.75% will lead to a massive £6 billion hit on the NHS so this seems an obvious course of action to take." 

Are the self-employed really underpaying NICs?

BBC personal finance correspondent tweets...

Does government need a fresh mandate?

Philip Hammond, Chancellor, Downing Street
Getty Images

The NICs U-turn suggests the government is struggling to get through "even moderately unpopular policies", says Tom McPhail, head of retirement policy at Hargreaves Lansdown.

"[This] was a modest and re-distributive measure which would have helped bring the self-employed National Insurance rates closer into alignment with the increased state pension benefits they now enjoy," he says.

"If this is how it is going to be until 2020, the government might be better off triggering an early general election in pursuit of a fresh mandate and an increased majority."

In the meantime, he says the U-turn will increase pressure in other areas of fiscal policy and "may increase the risk of further pension tax tinkering in the Autumn Budget".

'Not much left for Autumn Budget'

Money Box presenter, Paul Lewis tweets:

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