Warsh Hints at Rate Hike as Stocks Plunge and Oil Soars
Asian stocks plummeted on Monday as Federal Reserve boss Kevin Warsh hinted at a potential US interest rate hike, citing stubbornly high inflation. The hawkish comments sent investors scrambling to adjust their bets on the Fed's next move.
Inflation remains elevated at 3.7 percent, nearly double the Fed's two-percent target, and Warsh described the situation as 'concerning'. He stopped short of explicitly supporting a rate hike, saying he stands committed to a discipline rather than making a decision.
The market reacted with alarm, pushing yields on short-term US Treasury bonds higher and sending the dollar rallying against its peers. Gold, which benefits from lower interest rates, fell in value. Tech firms, which rely heavily on borrowing to fuel their AI investments, led the decline in Asian markets.
The Iran-US conflict continues to drive up oil prices, with both main crude contracts rising over two percent after a fresh flare-up in hostilities. The US-Iran war has now entered its sixth month, and tensions remain high despite attempts at peace talks.