International Indexes Down from US Fed Announcement

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US economic concerns are rippling out to other markets.

Last week, United States Federal Reserve Chairman Jerome Powell announced a continuation to rising interest rates in an effort to address the potential of inflation in the US economy. Powell conceded that while he believes this will be the best move in the long term, it will likely result in some difficulties in the near future.

“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said in prepared remarks. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

“We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%,” Powell continued, adding that “restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.”

Following Powell’s remarks, multiple national stock indexes suffered varying degrees of drop-off in anticipation of the US economy’s slowing. As the US is a major power player in the global economy, difficulties it faces ripple outward and effect the economies of countries that consistently do business with it.

In Japan, the Nikkei 225 index dropped 2.66% to 27,878.96, while in South Korea, the Kospi fell 2.18% to 2,426.89. Australia’s S&P/ASX 200 also took a hit, falling by 1.95%.

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9 months ago