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US Federal Reserve Chair Jerome Powell sent a clear message to financial markets last week, saying interest rates will remain high until inflation falls and stays low.
On Wall Street, the S&P Index plummeted 3.4 per cent on Friday after Powell’s remarks and the trend flowed to Australia on Monday with 2 per cent market falls. The Australian markets rebounded this week as the nation’s inflation remained at 6.1 per cent in June quarter. US inflation in the year to July soared to 8.5 per cent yet this was less severe than June's 9.1 per cent level – the steepest since 1981. Powell made clear that he is not convinced inflation has peaked and does not see the Fed stopping its rate rises anytime soon.
