US stocks and short-term government debt tumbled after the Federal Reserve announced a third consecutive 0.75 percentage point increase in interest rates and signalled borrowing costs would remain high for an extended period.
The US central bank on Wednesday lifted its main interest rate to a range of 3 per cent to 3.25 per cent. The increase was in line with expectations, but the closely watched “dot plot” of individual officials’ predictions pointed to further large increases and no cuts before the end of next year.
Wall Street’s benchmark S&P 500 index suffered a second day of losses, declining 1.7 per cent and taking its losses for the year to 20.5 per cent. The drawdown pushed hundreds of stocks trading in the US to new 52-week lows, with more than 90 per cent on the companies in the S&P 500 sliding in value.