US Fed Chairman Jerome Powell made a speech on Friday. In his speech, he stated that the interest rates will persist for some time. As a result, shares in the Asia-Pacific dropped after his speech due to the fear of recession.
The Chairman’s speech sent a message to the public that the interest rates will remain high in an effort to combat inflation. The monetary tightening will continue for quite some time. US market has also fallen after Powell’s statement that there is a need to increase the interest rates to combat inflation.
Fed Chairman: High Interest Rate Likely to Continue to Combat Inflation
The fear of recession is also evident in the Bitcoin market, as it experienced a break below USD 20,000. The Federal Reserve Chairman’s statement, however, boosted the dollar according to the analysts of the Bank of Singapore.
The US dollar is up over 10% this year alone. However, the borrowing costs all the way from US to Europe to Asia are remaining high for combating the highest inflation in a generation. According to Powell, the war in Ukraine and the COVID restriction policies in China are the main reason for the disruption of the global supply which in turn drives inflation.
Fed Chairman: US Federal Reserve is likely to maintain the restrictive policy
He stated that the US Federal Reserve is likely to maintain the restrictive policy stand in order to reduce the impact of the high inflation and to ensure the stability of prices. The investors expect the Fed’s policy rate to be increasing in the next few months and peak in March.
The US yield curve suggests that the bond market expects a recession to be necessary as a means to combat inflation. The chief investment adviser at BNP Wealth Management stated that there are 200 Chinese companies are facing the risk to be delisted from the US exchanges, and this may be a catalyst for Hong Kong’s Market.