Australian shares suffered their worst session in six weeks after US Federal Reserve chairman Jerome Powell warned that interest rates will rise further than anticipated, reversing a rally sparked by hopes the Fed is preparing to slow its aggressive tightening campaign.

The Fed lifted its benchmark interest rate by 0.75 percentage points early Thursday morning (AEDT) for the fourth consecutive time, taking the Fed funds rate to a range of between 3.75 per cent and 4 per cent, its highest level since 2008.