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Global stocks and crude oil have fallen after the Federal Reserve said a tighter monetary policy could come sooner than expected, as the U.S. central bank predicted significantly higher inflation this year.
Japan’s Topix index fell 0.6% and Australia’s S & P / ASX 200 fell 0.3 percent on Thursday in Asia-Pacific trading. The futures of the Wall Street S&P 500 index fell 0.3%, while the London FTSE 100 fell 0.5%.
Stock market weakness The Fed maintained its key interest rate on Wednesday between 0 and 0.25 per cent. But it shifted toward consensus among Faith officials rate hike in 2023, Was boosted from the previous forecast for 2024.
Core inflation is expected to be 3 percent this year, higher than the 2.2 percent expected in March, according to estimates by Fed officials.
U.S. Treasury yields, which rise as prices fall, stable after jumping In line with what the Fed announced. U.S. 10-year treasury yields remained stable at 1.579 percent in Asian trade, up nearly 0.1 percentage points from the previous session. The S&P 500 closed 0.5 percent lower on Wednesday.
Fed Chairman Jay Powell said “there is every reason to think that we will have a very attractive number in the job market, with low unemployment, high participation and rising wages across the spectrum.”
The Federal Open Market Commission also maintained its asset purchase program, which was introduced last year to soften the economic blow to Covid-19. unchanged at $ 120 billion a month. Powell said the process of ending the program will be “orderly, methodical and transparent,” adding that the changes will be indicated “beforehand.”
“We don’t think reducing the program will create significant stress on the economy or markets,” said Rick Rieder, BlackRock’s director of global fixed income investment. “The biggest risk today would be a warming paradigm, where it is difficult to predict how high entry or salary costs can be achieved.”
Shares in China, as interest rates are higher driven revenue From global investors looking for better returns, he sidestepped the Fed’s announcement. The CSI 300 index of shares listed in Shanghai and Shenzhen rose 0.3 percent, with data showing new home prices rising steadily in May. The Hong Kong Hang Seng index changed little.
Expectations for a tighter policy also affected oil prices, as Brent crude, an international benchmark, fell 0.4 percent to $ 74.12 a barrel. The US West Texas Intermediate fell to the same level to $ 71.86 a barrel.
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