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After the Federal Reserve announced 75bps interest rate hike the global market was turbulent.

Welcome to Read: FED's Rate Hike Impacts On Market & Recession By Global Experts

$S&P/ASX 200(XJO.AU)$ rose first and then fell on Thursday, falling 0.15% as of Thursday's close.

The accelerated tightening of the U.S. FED is bound to put pressure on the global financial system. 

On the one hand, global inflation increase is not difficult to stop. On the other hand, the impact of strong interest rate hikes also pouching the economy and financial markets.

Lastest reported that, RBA governor expects inflation to hit 7% by the end of 2022,and it is expected to continue to raise interest rates to 2.5% this year.

Philip Lowe，souce from

The head of Australia’s central Philip Lowe says inflation will likely reach 7% by the end of the year and it must be brought under control.

“By the end of the year, I expect inflation to get to 7%,” Lowe said in a rare television interview on ABC’s 7.30. “That’s a very high number and we need to be able to chart a course back to 2-3%. I’m confident we can do that but it’s going to take time. With inflation being as high as it is, and with interest rates as low as they are, we thought it was important to take a decisive step to normalise monetary conditions, and we did that at the last meeting.”

Lowe said in an ABC TV interview that the cash interest rate is expected to rise from the current 0.85% to a "reasonable" 2.5%.

After the comment, financial markets, economists and investors raised their interest rate forecasts.

The market has now fully digested the expectation that the RBA will raise interest rates by 50 bps at its next meeting in July.

If it rises for real, the cash interest rate will rise to 1.35%, which, together with the unexpected increase of 50 bps last week, will be the largest increase in cash interest rate since the two meetings since 1994.

The financial market now expects the cash interest rate to reach 4% by the beginning of next year and 4.2% by May. Two days ago, the implied peak was 3.8%, which is not expected to occur before the beginning of 2024.

Tapas Strickland, head of economics and markets at the National Bank of Australia (NAB), said that the combination of the inflation forecast and the neutral interest rate of about 2.5% expected by the RBA "means that they need to achieve this goal soon. We are closely watching the impact of the tightening policy, which aims to reduce inflation pressure in the short term."

At the same time, Australian consumer confidence index fell to recession level.

According to ANZ Roy Morgan's weekly survey, consumer confidence fell 7.6% last week after the Central Bank of Australia raised its cash interest rate by 50bps.

David plank, an economist at ANZ, said that confidence was at its lowest level since the beginning of the epidemic in early April 2020, and had never been so low since January 1991 (i.e. during the economic recession in the early 1990s).

It is expected that the proportion of respondents whose economy will usher in a positive trend in the next 5 years will fall to a record low of 10%, reflecting the poor state of market sentiment.

So far this year, despite weak consumer confidence, household spending has remained flexible. On the one hand, the RBA will pay close attention to whether this divergence will continue.

Tiger Brokers AU Strategist BRET Taloy said:

The U.S interest rate increase is similar to what is experienced across the globe currently, as we have seen with inflation figures coming out of the U.S, Australia and the Eurozone being from 5 - 8%.

The resulting raising of interest rates tends to increase their currency's value which decreases the purchasing power of any country trading goods, materials, commodities etc with them.

Higher interest rates obviously restrict the amount and affordability of funds that can be borrowed by both businesses and households, which has the effect of reducing growth and spending - which is what the rate increase is designed to do.

For the financial markets in Australia you can expect the ASX sectors like Consumer Discretionary, Financials and Real Estate to be adversely affected as they are linked to the aforementioned environment. Bond (Fixed Interest) markets become more attractive for investors, while supporting the government and corporates who issue them.

Welcome to Read:Weekly Highlights of the Larger Stocks in Each ASX Sectors！

As of press time, Top 5 gainners of ASX 200 companies are: $NEWCREST MINING LIMITED(NCM.AU)$ ,$GOODMAN GROUP(GMG.AU)$ ,$South32(S32.AU)$ ,$MIRVAC GROUP(MGR.AU)$ ,$GPT GROUP(GPT.AU)$

Top 5 lossers of ASX 200 companies are：$QANTAS AIRWAYS LIMITED(QAN.AU)$ ，$LENDLEASE GROUP(LLC.AU)$ ,$COCHLEAR LIMITED(COH.AU)$ ,$ORICA LIMITED(ORI.AU)$ ,$COMPUTERSHARE LIMITED(CPU.AU)$ .