ASX 200 falls with all sectors in red RBA and US Fed warn of...

	  ASX 200 falls with all sectors in red 

	  RBA and US Fed warn of higher inflation 

	  Financial stocks lead losses on the benchmark 

	  Energy stocks log lowest close since May 5 

(Updates to close)

Australian shares finished 0.6% lower on Friday, with banking stocks weighing the most on the benchmark, after the country's central bank warned of upside risks to inflation and the U.S. Federal Reserve Chair's hawkish remarks.

The S&P/ASX 200 index (xjo) fell 0.6% to 6,976.500 points. The benchmark closed 0.3% higher on Thursday.

In its quarterly statement on monetary policy, the Reserve Bank of Australia (RBA) said there was "potential for further upside surprises to inflation," pointing to domestic cost pressures and external factors such as global warming.

Additionally, Federal Chair Jerome Powell overnight said Fed officials "are not confident" that interest rates were yet high enough to finish the battle with inflation, adding to investor worries.

"Both the Fed and the RBA have successfully poured cold water on the surging notion of a peaked rate to highlight the undesired reality: the interest rate guessing game is far from being over," said Hebe Chen, a market analyst at IG Markets.

"It appears that the central bank's tightening journey has entered a new stage, characterised by more uncertainty and unpredictability."

In Sydney, rate-sensitive financials led losses on the local bourse, falling 1%. The 'big four' banks lost between 0.8% and 1.8%.

National Australia Bank (NAB) was the top drag on the benchmark, falling 1.8% to a 10-day low after its annual cash profit missed analyst estimates.

Energy stocks .AXEJ ended 1.5% lower, logging their lowest close since May 5, as oil prices struggled on supply disruption worries stemming from the Israel-Hamas conflict.

Sector majors Woodside Energy (WDS) and Santos (STO) fell 2% and 0.7%, respectively.

Gold stocks .AXGD fell 0.8%, down for the third straight day, tracking a global drop in gold prices on the back of a stronger U.S. dollar and Treasury yields.

The New Zealand benchmark S&P/NZX 50 index (nz50) ended 0.4% lower, losing all gains from yesterday, at 11,154.2100.