Asian shares edged higher following a Wall Street rally, as investor sentiment was buoyed by expectations that the Federal Reserve may still deliver two rate cuts this year.
On Wednesday, the Fed kept interest rates unchanged, as widely anticipated, but reaffirmed its projection for two quarter-point cuts by year-end. However, policymakers revised their inflation forecast upwards and lowered their economic growth outlook, citing risks stemming from U.S. President Donald Trump’s tariff policies.
Despite these concerns, investors took comfort in the Fed’s “dot plot” of policy rate expectations and Chair Jerome Powell’s assurance that tariff-driven inflation would be “transitory” and largely contained within this year. This optimism fueled stock gains, while U.S. Treasury yields and the dollar declined.
Australian shares jumped 1%, while Japanese markets remained closed for a public holiday.
On Wall Street, stocks climbed after the Fed’s decision, with the Dow Jones Industrial Average rising 0.9% to 41,964.63, the S&P 500 gaining 1.1% to 5,675.29, and the Nasdaq Composite advancing 1.4% to 17,750.79.
In the bond market, U.S. Treasury yields retreated from earlier gains following the Fed’s policy guidance. The yield on the benchmark 10-year Treasury note slipped to 4.249% from 4.281% late Tuesday.
