US markets opened lower after US Federal Reserve chair Jerome Powell delivered a hawkish speech at the Cato Institute conference on Thursday.
The NASDAQ fell 0.2% to 11,757.7, the Dow Jones dropped 0.3% to 31,461.4 and the S&P 500 slid 0.2% to 3,968.8.
Powell confirmed the Fed was “strongly committed” to controlling inflation, however he noted belief it would be possible to wrestle inflation back to its 2% target without bringing the “very high social costs” emblematic of Paul Volcker’s fight against inflation in the early 1980s, which triggered a recession and saw unemployment soar above 10%.
US inflation currently stands at 8.5%, falling from 9.1% the previous month. Some analysts hoped the positive data would give the Fed cause to slow down its aggressive rate hikes.
However, Powell warned at the Jackson Hole convention last month that a single month of positive data was insufficient to dissuade the institution from its hawkish stance.
A “goldilocks” jobs report also served to encourage Powell’s conviction to hike rates, citing a tight labour market as a driver behind high inflation. The US nonfarm payroll report for August revealed 315,000 new jobs added to the economy against analyst expectations of 300,000.