SET Index Drops 1.7% as Fears over US Inflation and Fed’s Aggression on Rate Hikes

Thailand’s SET Index plunged as much as 27 points or 1.71% to 1,585.68 points in the morning session on Thursday, May 12, 2022, amid negative sentiment in the equity markets after the U.S. reported higher-than-expected inflation in April, raising concerns in the market that the Federal Reserve could move more aggressively toward its monetary policy by hiking interest rate at a much higher rate. 

Yesterday, the U.S. inflation in April accelerated to 8.3%, higher than expectations of 8.1% by economists. The figure was at the highest level in 40 years. Meanwhile, core CPI, which excludes food and energy, also was higher than economist expectations, rising 6.2%, according to the data released by the Bureau of Labor Statistics on Wednesday.

Shelter costs, which comprise about one-third of the U.S. consumer price index (CPI), rose at their fastest pace since 1991.

An interest rate hike at a faster rate to slow down the rising inflation could tamper the economic recovery that has been damaged from the Covid-19 outbreak. Investors will look for more guidelines from the Fed of how the central bank will balance things out.