The Federal Reserve said increasing rate “will soon be appropriate”

On Wednesday, Federal Reserve Chairman Jerome Powell reportedly said that the committee is of a mind to raise interest rates in March as part of an effort to combat the highest inflation in decades.

 The Fed didn’t say the economy has reached full employment, which would fulfill the central bank’s second condition for raising rates, but it did cite a “strong labor market.” 

The Fed previously said its other benchmark – inflation running above 2% for “some time” – had been met.

Investors have been nervously eyeing the Fed’s next steps, worried that its policy changes will hurt stock and other asset prices and rapidly slow down the economy. 

Wall Street’s benchmark S&P 500 index lost 0.1% on Wednesday after the Fed statement

In Asia, the Nikkei 225 in Tokyo fell 3.1% to 26,170.30 and the Hang Seng in Hong Kong retreated 2% to 23,807.00.

The Kospi in Seoul sank 3.5% to 2,614.49 after a stunning market debut for LG Energy Solutions, one of the biggest makers of batteries for electric cars. It ended the day with South Korea’s second-highest stock market value behind Samsung Electronics after its initial public offering drew 13 trillion won ($11 billion) in bids.

The Shanghai Composite Index declined 1.8% to 3,394.25 and Sydney’s S&P-ASX 200 shed 1.8% to 6,838.30.

India’s Sensex lost 0.8% to 57,423.10. New Zealand declined after inflation accelerated to a 30-year high of 5.9% over a year earlier in the final quarter of 2021. Jakarta advanced while Bangkok and Singapore fell.

The Dow Jones Industrial Average fell 0.4%. The Nasdaq composite ended little-changed, shedding a 3.4% gain earlier.

Powell also addressed the disruptions caused by the Omicron variant of COVID-19, which has led to a wave of workers calling in sick and harmed activity in virus-sensitive sectors.