The S&P/ASX 200 Index (ASX: XJO) looked like it was heading for a decent Friday after a strong lead from Wall Street.
However, those early gains have now disappeared.
The ASX 200 is down 0.09% to 8,725 points in early afternoon trade, after reaching 8,771 earlier in the session.
That means the index has dropped almost 47 points from its morning high.
So, what's dragging the market lower right now?
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A decent lead from Wall Street
There was actually plenty going the ASX 200's way before today's market open.
Wall Street finished comfortably higher overnight, with the S&P 500 Index (SP: .INX) gaining 1.14% and the Nasdaq Composite Index (NASDAQ: .IXIC) jumping 1.69%.
The Dow Jones Industrial Average Index (DJX: .DJI) also climbed 0.61%.
Oil prices moved lower as well, with Brent crude falling 1.6% to US$103.92 a barrel for its second straight decline.
Meanwhile, the US 10-year Treasury yield dropped back below 5% to around 4.93%.
That helped the ASX 200 open higher and climb around 0.45% in early trade.
However, it appears attention has now shifted back to interest rates here in Australia.
Rates are back in focus
The RBA has been back in the spotlight today after Governor Michele Bullock appeared before a parliamentary committee.
According to Reuters, said some of the inflation risks the RBA had warned about were now starting to emerge.
She pointed to higher oil prices and the global AI investment boom as two areas putting more pressure on prices.
The RBA has already lifted rates 3 times this year, taking the cash rate to 4.35%, but another increase could be coming.
Markets are now pricing a 93% chance of another 25-basis-point hike at the RBA's 29 September meeting.
This would take the cash rate to 4.60%.
Banks weigh down the index
The big banks are doing plenty of the damage today, with all four major lenders trading lower.
Commonwealth Bank of Australia (ASX: CBA) shares are down 1.16% to $152.23, while National Australia Bank Ltd (ASX: NAB) is 1.10% lower at $38.79.
Westpac Banking Corp (ASX: WBC) has fallen 0.89% to $34.52, and ANZ Group Holdings Ltd (ASX: ANZ) is down 0.50% to $37.59.
Interestingly, the market underneath is actually holding up reasonably well.
At the latest reading, 105 ASX 200 shares were higher, 92 were lower, and 3 were unchanged.
Foolish takeaway
Friday's session has turned into another fairly choppy one for the ASX 200 after two consecutive gains.
The index is now down around 1.1% over the past week and 3.8% over the past month.
With the next RBA decision coming on 29 September, interest rates will be a hot topic over the next few sessions.
