Market falls in anticipation of Fed chief’s speech

Powell, in his speech, warned that the US central bank is ready to take additional measures to curb inflation, including raising rates further until inflation comes in the target range of 2%.

Federal Reserve Chairman Jerome Powell (Photo | AP)

NEW DELHI: The domestic equity market plunged on Friday with all sectoral indices closing in red amid weak global cues, renewed fears of inflation, and more interest rate hikes.

Sensex plunged 365.83 points to close the week at 64,886.51 while NSE Nifty50 slumped 143.70 points to close 19,243.

The markets fell ahead of the US Federal Reserve Chair Jerome Powell’s keynote speech at the annual Jackson Hole. Participants were expecting Powell to maintain a hawkish tone on future rate hikes and this is what exactly happened.

Powell, in his speech, warned that the US central bank is ready to take additional measures to curb inflation, including raising rates further until inflation comes in the target range of 2%. Consumer inflation in the US grew at 3.2% annually in July while the key rate at 5.25% is the highest in 22 years. 

While Powell said there has been a reduction in inflation from its peak, the current level still poses a concern. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,” he said.