Equity markets tumbled in Asia on Thursday following a late sell-off on Wall Street in reaction to a surprisingly hawkish turn by Federal Reserve boss Jerome Powell who signalled the bank would begin lifting interest rates in March.
After one of the Fed's most highly anticipated meetings for some time, he said the world's number one economy was well on the recovery path with unemployment largely under control, allowing officials to begin removing the crutches put in place at the start of the pandemic.
Analysts said the fact that the bank appeared less moved by recent market losses indicated to traders a high bar for the so-called "Fed put" -- referring to its willingness to backstop investors in times of trouble. Officials still believe that the price rises will be brought under control as economies reopen and supply chain problems abate, but the need to prevent them running away now is forcing them into an aggressive pivot.
Commentators were left guessing how much the Fed will lift rates in March and how many more times it will do so, with estimates ranging from a total of three this year to as many as five."At least in today's case, Powell's desire for flexibility was viewed as hawkish, given his comments regarding inflation," Sameer Samana, of Wells Fargo Investment Institute, said.
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