Months of slowing price rises fuelled hopes the Federal Reserve could soon pause its tightening drive or even cut rates this year, but that optimism was dealt a blow last Friday by data showing the jobs market remains strong.
And key members of the central bank have lined up this week to acknowledge that while there had been progress in the inflation battle, there would be more pain to come before things got easier.
After bank boss Jerome Powell on Tuesday reiterated last week's post-meeting statement that he saw more hikes in the pipeline, several top officials provided further insight Wednesday.
New York Fed chief John Williams said the policy board needed to "attain a sufficiently restrictive stance of policy" and then "maintain that for a few years to make sure we get inflation to two percent", the bank's inflation target.
Governor Christopher Waller added: "It might be a long fight, with interest rates higher for longer than some are currently expecting."
Meanwhile, Minneapolis boss Neel Kashkari warned there was "not yet much evidence, in my judgment, that the rate hikes that we've done so far are having much effect on the labour market".
"We need to bring the labour market into balance, so that tells me we need to do more."
The comments came after a closely watched US jobs report showed more than half a million new posts were created last month, far more than expected.
With the world's top economy still showing resilience despite almost a year of rate hikes and surging prices, observers said traders' hopes for a rate cut this year were fading.
Some are now predicting they could go as high as six percent, almost one percentage point above what is currently being priced in.
"I don't think the Fed will cut within this year," Jun Bei Liu, at Tribeca Investment Partners, told Bloomberg Television.
"The Fed was behind the curve in terms of putting up their interest rate, and they certainly are going to be very slow in cutting the interest rate."
All three main indexes on Wall Street ended lower Wednesday, led by tech firms, and most of Asia followed suit.
Tokyo, Sydney, Seoul, Singapore, Wellington, Taipei, Mumbai, Bangkok, Manila and Jakarta were all in the red.
However, Hong Kong and Shanghai rose more than one percent apiece on China reopening hopes and bargain-buying after a string of losses at the start of February.
Mumbai-listed shares of the troubled Adani conglomerate tanked again after global stock index compiler MSCI said it was reviewing the status of equities in the group.
Adani Enterprises plunged more than 11 percent.
"MSCI has determined that the characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float pursuant to our methodology," the firm added.
"This determination has triggered a free float review of the Adani Group securities."
MSCI defines a free float as the proportion of shares that can be bought publicly in share markets by international investors.
The business empire of Indian billionaire Gautam Adani lost more than $100 billion in value after US short-selling investment group Hindenburg Research accused it of artificially inflating share prices.
London and Paris opened higher, as did Frankfurt even as data showed German inflation picked up slightly last month.
- Key figures around 0820 GMT -
Tokyo - Nikkei 225: DOWN 0.1 percent at 27,584.35 (close)
Hong Kong - Hang Seng Index: UP 1.6 percent at 21,624.36 (close)
Shanghai - Composite: UP 1.2 percent at 3,270.38 (close)
London - FTSE 100: UP 0.5 percent at 7,921.42
Dollar/yen: DOWN at 131.03 yen from 131.42 yen on Wednesday
Euro/dollar: UP at $1.0738 from $1.0716
Pound/dollar: UP at $1.2103 from $1.2071
Euro/pound: DOWN at 88.72 pence from 88.75 pence
West Texas Intermediate: DOWN 0.1 percent at $78.37 per barrel
Brent North Sea crude: DOWN 0.1 percent at $85.02 per barrel
New York - Dow: DOWN 0.6 percent at 33,949.01 (close)
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