After putting traders on notice six weeks ago to expect further increases in US interest rates in 2019, the Federal Reserve on Wednesday executed one of its sharpest U-turns in recent memory.

Leaving rates unchanged at 2.25-2.5 per cent, Jay Powell, Fed chairman, unveiled new language that opened up the possibility the next move could equally be down, instead of up. Forecasts from the Fed’s December meeting that another two rate rises are likely this year now appear to be history.

Changes to its guidance were needed, Mr Powell argued, because of “cross-currents” that had recently emerged. Among them were slower growth in China and Europe, trade tensions, the risk of a hard Brexit and the federal government shutdown. Financial conditions had also tightened, he added.