Equity markets sank Friday and oil extended a sharp selloff after a string of interest rate hikes by central banks revived worries about the global economy. ManilaBulletin READ:
Eyes are also on Tokyo after forecast-beating inflation figures fuelled speculation on whether the Bank of Japan will shift away from its ultra-loose monetary policy that has dragged on the yen.
Last week's decision to stand pat after 10 straight increases added to the sense of hope, but warnings Wednesday from boss Jerome Powell that more work was needed took the wind out of traders' sails.His comments came as the Bank of England lifted rates more than expected, while officials in Switzerland and Norway also tightened. That followed hikes last week in the eurozone, Australia and Canada.
However, some observers are sceptical the Fed will follow through with its warnings as US inflation continues to subside, falling to 4.0 percent in May from 4.9 percent in April. The Fed's target is 2.0 percent."There is a lengthy lag between when monetary policy is implemented and when it actually shows up in the real economy data," she said. "We haven't seen much of an impact yet because of that lag.
Oil prices also fell, having tumbled around four percent Thursday on fresh demand concerns caused by the prospect of rates going ever higher, while China's ongoing struggles were also weighing on sentiment.
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