Asian equites inched down moderately as investors weighed the Federal Reserve raised rates by half a point to tame down inflation.
Shares in Mainland China, Hong Kong, South Korea, Thailand and Japan closed moderately lower. The MSCI Asian Index ex Japan inched down by 0.44%.
“We are puzzled why the market thinks that Fed hikes are going to stop inflation,” said Nancy Davis, founder of Quadratic Capital Management as reported by Bloomberg.
“We see inflation as driven by massive government spending, supply chain disruptions and, more recently, by Russia’s invasion of Ukraine.”
Meanwhile, the Bank of England is expected to raise rates later to their highest level in 13 years and provide clarity on its plans to sell off some of its 847 billion pounds government bond holdings.
The Fed on Wednesday raised interest rates by 50 basis points for the first time since 2000 and signaled similar moves for the next couple of meetings. Powell pushed back against a larger 75 basis-point increase, sparking a global relief rally.
The U.S. central bank will also allow its holdings of Treasuries and mortgage-backed securities to decline in June at an initial combined monthly pace of $47.5 billion, stepping up over three months to $95 billion.
The soaring price of commodities, intensified by the war in Ukraine, is complicating the job of policy makers trying to bring the fastest inflation in four decades under control.
Crude oil stayed steady with WTI trading around $108 a barrel while Brent trading around $110 a barrel.