Oil surged past $133 a barrel on Wednesday, fuelling fresh concerns in the markets about how central banks would deal with the growing threat of rising inflation and slowing growth.

On Wednesday the Federal Reserve lowered its outlook for US economic growth this year and raised its unemployment and inflation forecasts. The Fed expects core inflation will rise to between 3.1 per cent and 3.4 per cent this year, up from a prior estimate of between 2.1 per cent to 2.4 per cent. The Fed’s April meeting minutes characterised the reduction in rates last month as a “close call” and Wall Street weakened further in afternoon trade.