Futures traders pushed their predictions for the Reserve Bank’s peak cash rate to 4.3 per cent in 2023. Australian shares fell 1.6 per cent to 6469.4 points.
The British pound collapsed to a historic low against the US dollar on Monday as Europe inched closer to its own currency crisis following the election of new Italian Prime Minister Giorgia Meloni.
"The new UK government has clearly gone too far this time, which is an extremely rare spectacle for a developed market," said Macquarie's offshore sales and trading desk. "Sterling's best hope now is the prospect of a large emergency rate hike from the Bank of England." Global markets are gripped by the fear of recession as the US Federal Reserve refuses to back down from its aggressive monetary tightening, which it argues is necessary to end high inflation. UK chancellor Kwasi Kwarteng has promised to slash taxes in a debt-funded pro-growth strategy that will only fuel Britain's inflation problem., hinting at further tax relief, and declining to comment on the market's savage reaction.
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