Australia shares closed lower on Friday as investors were on edge after the country’s central bank cautioned about rate hikes in response to inflationary risks due to the recent surge in commodity prices, hurting technology and banking stocks.

The S&P/ASX 200 index ended 0.9% lower at 7,063.60.

The benchmark dropped 0.7% on the week to clock its worst weekly performance since Feb. 25.

With US inflation hitting a 40-year high, Reserve Bank of Australia Governor Philip Lowe told borrowers it would be prudent to prepare for a rise in interest rates this year.

“You can expect them (interest rates) moving mid-year rather than the end of the year at this stage,” said Brad Smoling, managing director at Smoling Stockbroking.

Financial markets are wagering heavily on a first rise in the 0.1% cash rate by June, partly because the US Federal Reserve is widely expected to lift rates next week and several other major central banks have already tightened.

“The inflation rate is moving very quickly, both the core and CPI calculation excluding food and energy, so it’s like a sweeping inflation right across the board.”

Among growth stocks, the technology index slid 3.2% and led declines on the benchmark after its Wall Street peers ended in red overnight.

Xero and WiseTech Global slumped 5.9% and 4.1%, respectively.

Financials slipped 0.6%, but gained 2.2% this week to notch their best week in a month.

Among the “Big Four” banks, Commonwealth Bank of Australia and National Australia Bank shed 0.4% and 0.2%, respectively.On the upside, the metals and mining index advanced 0.3% on strong iron ore prices.

The energy index added 0.3% as oil prices clawed back some lost ground.

New Zealand’s benchmark S&P/NZX 50 index fell 0.9% to 11,821.38.

The benchmark lost 2.6% in five days, its worst week in six.