Asian stocks mixed and European futures flat on rate hike worries

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Asian stocks were mixed and the yen fell on Friday, capping off a back-and-forth week that saw investors split on how aggressively the Federal Reserve would raise interest rates to tackle inflation.

San Francisco Federal Reserve Bank president Mary Daly said on Thursday that while a 50 basis point rate hike next month "makes sense" given economic data, she'd be open to a bigger hike if necessary. The rate is currently in the 2.25%-2.5% range.

Furthermore, Minneapolis Fed President Neel Kashkari said he hadn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023.Odds of a 75 bps hike in September were as high as 68% earlier in the week, but are now around 34%, where they were a week ago.

"The key question is how far and how fast it will fall. We believe inflation will be quite sticky and central banks will need to be more hawkish than consensus." In commodities, Brent crude oil futures fell 54 cents to $98.06 a barrel. U.S. West Texas Intermediate crude was also down, dropping 55 cents to $93.79.

 

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