THE US Federal Reserve is continuing its all-out war on inflation, reacting to the highest consumer price increases in 4 decades with the biggest interest-rate hike in 28 years.

It now seems unlikely that the US economy, caught in the crossfire of this battle, can avoid a bruising recession. And that could mean more collateral damage on the beleaguered stock market.

On Wednesday (Jun 15) at the end of the central bank’s 2-day policy meeting, Fed chairman Jerome Powell’s rate-setting committee boosted interest rates by three-quarters of a percentage point, the largest hike since 1994. The drastic move demonstrated the central bank’s determination to stop inflation spiralling out of control.