July 14, 2022, 04.56 PM

HONG KONG, KOMPAS.com - Asian markets were mixed Thursday, July 14, as another forecast-busting US inflation print ramped up bets on a series of sharp interest rate hikes by the Federal Reserve, and other central banks race to tighten monetary policy.

The keenly awaited consumer price index came in at a blistering 9.1 percent in June, the highest since November 1981, as energy costs continued to rocket on the back of rising demand and weak supplies partly caused by the Ukraine war.

Months of soaring inflation have rocked global markets as central banks, fearing prices will run too high, are forced to quickly withdraw the ultra-cheap cash policies put in place at the start of the pandemic.

But that has fanned fears that policymakers could go too far and tip leading economies into recession.

Wednesday’s CPI reading was followed by speculation the Fed could hike borrowing costs a full percentage point at its next meeting this month, with some top officials refusing to rule it out just yet.

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The bank last month unveiled its first 75 basis point rise for three decades and is one of dozens to hike rates. Singapore and the Philippines became the latest to tighten policy on Thursday, a day after Canada, New Zealand, Chile, and South Korea announced hikes.

The inflation reading followed Friday’s surprise spike in US jobs creation, which suggested the world’s top economy was withstanding the rate hikes, giving the Fed more room for further increases.

“Stubbornly high inflation increases the risk that the (Fed) continues to hike aggressively and triggers a recession,” said Kristina Clifton at Commonwealth Bank of Australia, adding that that belief was picking up momentum on trading floors.

Glimmers of hope

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Source AFP
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