Surprise US inflation dampens ASX 200 bank stocks


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ASX 200 bank stocks are slipping today amid 40-year high inflation numbers in the US.

The Australia and New Zealand Banking Group Ltd (ASX:ANZ) stock price is down 1.92%, while the Westpac Banking Corp. (ASX:WBC) the stock price is down 1.76%.

The Commonwealth Bank of Australia (ASX:CBA) the stock price also fell 1.49%.

Let’s take a closer look at why ASX 200 bank stocks are falling.

ASX Bank 200 shares down

Other ASX 200 banking stocks sliding today include Macquarie Group Ltd. (ASX: MQG) down 0.68% and National Australia Bank Ltd (ASX:NAB) down 0.46%.

The S&P/ASX 200 Financial Index (ASX:XFJ) is also 0.82% in the red.

In news from the US overnight, inflation jumped to 9.1%, suggesting the Fed will raise rates again. High inflation in the United States could raise fears that Australia could follow a similar trend.

Broker warns 3.5% cash rate would lead to ‘housing collapse’ in Australia

A note from UBS quoted by The Australian warns that an interest rate of 3.5% would cause a “housing crash” and could lead to a recession.

UBS Australia Chief Economist George Tharenou said:

We still believe that a market price of around 3.5% – if delivered – would likely lead to a housing bust and see the economy approaching a recession.

Interest rate hikes can mean higher prospects for bad debt, as my fellow fool Tristan reports today. However, on the other hand, rising rates may also lead to increased credit lines for banks.

Home loan rates could almost double to 6%

In other comments reported in The AustralianTharenou warned that interest payments could almost double to 6% at a cash rate of 3.5%, adding:

Interest payments across the economy next year for the household sector will nearly double from now. It really crushes household cash next year when you have cost of living issues.

The labor market is tightening again

Meanwhile, new figures from the Australian Bureau of Statistics released today show unemployment fell by 0.4%, from 3.9% to 3.5%.

This could spark more speculation about rate hikes, given that inflation is often higher in a low unemployment environment.

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