March,23(Agencies)– Asian markets skidded Thursday, tracking losses on Wall Street after the US Federal Reserve hiked interest rates again and dealt a blow to hopes it could cut them later in the year to soothe worries over the banking sector.
Recent turmoil caused by the collapse of two US lenders and the takeover of Credit Suisse had fanned speculation central banks would pause their inflation-fighting monetary tightening campaign.
But on Wednesday, officials announced a ninth straight increase in the cost of borrowing as they put their emphasis on containing prices, though the 25-basis-point rise was half of what was expected at the start of the month.
Fed boss Jerome Powell also told journalists that “rate cuts are not in our base case” and warned that there needed to be more supervision and regulation of banks to prevent another crisis.
Speculation had been swirling that officials would announce a cut as the collapse of Silicon Valley Bank and Signature Bank has been blamed on the impact of more than a year of rate hikes.
However, analysts said the Fed had to walk a thin line as announcing a pause could have fuelled worries there was more to the banking sector’s woes than met the eye.
Powell added that the crisis in the banking sector was likely to bring “tighter credit conditions for households and businesses”.
His comments came as Treasury Secretary Janet Yellen told lawmakers that authorities were not looking at a blanket increase in deposit insurance for banks.
Key figures around 0230 GMT were Tokyo-Nikkei 225: DOWN 0.2 percent at 27,400.37 (break), Hong Kong – Hang Seng Index: DOWN 0.3 percent at 19,535.85, Shanghai – Composite: DOWN 0.1 percent at 3,261.73, Euro/dollar: UP at $1.0884 from $1.0860 on Wednesday, Euro/pound: UP at 88.56 pence from 88.47 pence
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