Most Asian markets drop on Fed rate fears as US inflation rages

Most Asian markets drop on Fed rate fears as US inflation rages

AFP / Hong Kong

Asian markets sank yesterday after a sell-off on Wall Street in response to a forecast-busting jump in US inflation that fanned expectations the Federal Reserve will embark on a more aggressive campaign of monetary tightening.

The 7.5% jump in prices last month was the fastest in 40 years and reinforced fears that the central bank is falling behind the curve in keeping it under control, which has fed a sense of uncertainty across trading floors.

US stocks immediately sank on the news but managed to claw their way back as the day progressed before being hit by Fed official James Bullard, who said he wanted to see interest rates lifted one percentage point by the start of July.

The St Louis Fed boss said he was in favour of a 50 basis point lift next month - double the usual rise and the first since 2000 - and two more after that.

“I’d like to see 100 basis points in the bag by July 1,” Bullard, who has a vote on policy this year, told Bloomberg News. “I was already more hawkish but I have pulled up dramatically what I think the committee should do.”

He added: “I do