After the US Federal Reserve cautioned that higher interest rates are here to stay, the Australian stock market fell by more than $45 billion. The Australian stock market fell 1.7% as US Federal Reserve Chairman Jerome Powell advised against prematurely cutting official interest rates.
The Australian stock market opened with a loss of over $45 billion as US Federal Reserve chairman Jerome Powell warned that higher interest rates are here to stay.
On Monday, the benchmark S&P/ASX200 started 1.74 percent down after investors on the Australian Securities Exchange reacted negatively to his speech on Friday evening.
Mr. Powell stated at the Jackson Hole central bank symposium in Wyoming that higher interest rates were required to combat some of the worst inflation in the United States in the past four decades.
“Restoring price stability would certainly require a protracted period of tight monetary policy,” he said.
Historical evidence clearly warns against prematurely easing policy.
The Commonwealth Bank, Australia’s largest mortgage lender, lost 1.7% to $96.62 per share.
The Australian stock market opened with a loss of more than $45 billion after US Federal Reserve Chairman Jerome Powell warned that higher interest rates were here to stay (pictured are screens at the Australian Securities Exchange)
Buy now, pay later app After announcing a $1.1 billion full-year loss last week, Zip Co shares dropped 5% to 86 cents.
The Australian stock market’s declines remain moderate in comparison to Wall Street, where the Dow Jones Industrial Average concluded Friday night 3% lower.
Mr. Powell had warned a stricter monetary policy was required in the world’s largest economy to combat the strongest inflationary pressures in four decades.
He stated, “Reducing inflation is going to need an extended period of below-trend growth.”
In the year leading up to July, U.S. inflation increased by 8.5%, but this was less severe than June’s 9.1% rate, which was the highest since 1981.
Jerome Powell stated at the Jackson Hole central bank symposium in Wyoming that higher interest rates were required to combat some of the highest inflation in the United States in the past four decades.