US stocks sink on Powell's hawkish inflation speech

ANKARA

US stocks closed Friday with heavy losses following Federal Reserve Chair Jerome Powell's hawkish inflation speech at the Jackson Hole meeting.

The Dow plummeted 1,008.38 points, or 3.03%, to 32,283.40. The S&P 500 was off 3.37% to 4,057.66 and the Nasdaq slid 3.94% to 12,141.71.

Higher interest rates, slower growth and softer labor market conditions will reduce inflation while causing some pain to households and businesses, said Powell.

He said the Federal Open Market Committee's (FOMC) overarching focus right now is to bring inflation down to its 2% goal.

On the other hand, Gita Gopinath, the International Monetary Fund's first deputy managing director also said central banks must be in the driver's seat in bringing down inflation to target ranges and anchor inflation expectations.

The way central banks communicate with markets on rising prices is important, she said, adding they should indicate they will “stay the course” and maintain tight policies as long as inflation remains high.