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The latest remark by the US Federal Reserve Chair Jerome Powell on interest rate hikes has fueled volatility in global markets. All major US benchmarks slid more than 1% while equity futures for Australia, Japan, and Hong Kong also declined.

Powell on Tuesday said that Fed is prepared to hike rates in larger steps if economic data suggests tougher measures are needed to control rising prices.

The remarks were his first since data showed inflation unexpectedly jumped in January and the US government reported an unusually large increase in payroll jobs for the month.

Firstly, Wall Street stocks tumbled on Tuesday. The Dow Jones Industrial Average shed around 575 points, or 1.7%, to finish at 32,856.46, and the broad-based S&P 500 shed 1.5% to 3,986.37, while the tech-rich Nasdaq Composite Index dropped 1.3% to 11,530.33. The European market also turned red. The pan-European STOXX 600 index lost 0.77% and MSCI's gauge of stocks across the globe shed 1.46%.

The US central bank has already raised its benchmark lending rate eight times since early last year, as it contends with inflation that remains stubbornly above its long-term target of two percent.

It raised rates last month by a quarter percentage point to 4.50-4.75 percent, its highest level since the global financial crisis. Powell's comments raise the likelihood of the Fed lifting rates by 50 basis points at its next meeting on 21-22 March. US job creation surged in January, with employers creating more than half a million new jobs and driving the unemployment rate to its lowest level since the 1960s.

At Tuesday's hearing, Powell also faced questions about ongoing negotiations between the Biden administration and Republicans in Congress over raising the debt ceiling. The United States hit its $31.4 trillion borrowing cap in January, kicking off frantic talks between Congress and the White House to raise the limit and allow the US to meet pre-existing spending commitments.

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