“The pace of the recovery looks like it has slowed since the cases began that spike in June,” Mr Powell said at a press conference following the meeting.

“It’s too early to tell both how large that is and how sustained it will be.

"We just don’t know yet."

It comes as the dollar index fell 0.5 percent, bringing its monthly losses to about four percent. 

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12.30pm update: Europ drops against US dollar

The euro has dropped after rallying against against the US dollar over the past two months.

The drop comes after Germany reported disappointing economic output for the second quarter and the Federal Reserve maintained its support for the US economy.

The euro was set to end July with its best monthly gain in a decade, a 4.7 percent jump, but a shift in the bullish mood is threatening the milestone.

The euro lost about 0.34 percent to $1.1752 as the continent's stock markets fell after disappointing second-quarter earnings weighed on morale.

David Madden, an analyst at CMC Markets, said: “The change in risk sentiment this morning has prompted some traders to buy the greenback as it has been a safe-haven play recently.

"The euro came under more pressure on the back of the German flash GDP reading."

12.15pm update: German bonds plunge to two-and-a-half month lows

Safe-haven German government bond yields hit new two-and-a-half month lows today as the country's economy showed a worse-than-expected, record contraction in the second quarter.

The German economy contracted by 10.1% in the second quarter in its steepest plunge on record, worse than the 9% contraction predicted by Reuters economists and wiping out nearly 10 years of economic growth.

DZ Bank strategist Daniel Lenz said: ”The drop was even harsher, more pronounced than expected, which is something that is also being reflected by the market.

"There has been a lot of optimism in the spring with corona numbers going down and some early indicators going up.”

Referring to France and Spain, he added: “Now, with this very weak reading of German GDP numbers...(there is an) expectation that maybe some of the other European readings will be even worse.”

11.45am update: The FTSE-100 index is down 111.10 at 6020.36

11.15am update: FTSE continues to plunge

FTSE's bleak day continues as the index drops and drops.

After opening at 6,131, FTSE has now dropped to 6,032.

This marks a devastating loss of 1.61% in a single morning.

9.25am: Rough start for EU markets

Like the FTSE, European markets have also struggled this morning.

Euronext 100, CAC 40, DAX and Swiss Market Index are all down.

Euronext is down 0.46%, CAC 0.58%, DAX 1.56% and Swiss Market 0.90%.

8.35am update: FTSE tumbles on open

FTSE has fallen on open, wiping out yesterday's gains.

The index closed on 6,131 yesterday but has already dropped to 6,074 this morning.

This marks a fall of almost a full percentage point.

6.25am update: Hong Kong's commercial lenders on edge as building values tumble

Commercial lenders in Hong Kong say they are concerned about a 30 percent drop in building values over the past 12 months and will consider calling in or restructuring loans if values fall much further.

If lenders demand repayment of loans or try to tighten terms, it could set off a wave of property sales that might depress prices even further in the Chinese-run territory, which is already stuck in a recession due to the US-China trade spat, violent street protests last year and the new coronavirus.

“The market is not going to get better in the next half to one year,” said a real estate investor who provides financing in the city. “If you’re in the Hong Kong market, I’d say de-risk if you can. Get your money back.”