Asian equities pushed higher on Wednesday, brushing off a cautious signal from Federal Reserve Chair Jerome Powell, who reaffirmed that the US central bank is in no rush to cut interest rates. Investors remained optimistic despite Powell’s measured stance and looming US inflation data that could shape the Fed’s policy trajectory.
Powell’s comments underscored the Fed’s careful balancing act. He acknowledged that monetary policy was no longer as restrictive as before, but with economic strength persisting, there was no immediate need to lower rates. He warned that cutting too quickly or aggressively could disrupt progress in containing inflation, while a slow approach carried the risk of economic stagnation.
Despite the Fed’s tempered outlook, Asian markets remained resilient. Investors also assessed potential risks from the latest US trade policies, as President Donald Trump’s decision to impose 25 percent tariffs on steel and aluminium imports sparked fresh concerns over potential retaliatory measures. Market participants speculated on the broader implications, given Trump’s ongoing agenda to reform tax, regulatory, and immigration policies.
The Federal Reserve has already cut interest rates three times in the past year amid signs of a cooling labour market and subdued inflation. However, traders have recalibrated expectations for further easing, particularly as inflation remains stubbornly above target. Some analysts pointed to the potential inflationary impact of Trump’s trade policies, which could force the Fed to maintain higher interest rates for longer to counter rising consumer prices.
New York Fed President John Williams echoed Powell’s caution, emphasising that while consumer spending and economic growth remained robust, inflation was still expected to gradually ease toward the Fed’s 2 percent goal. However, he acknowledged that achieving sustained stability would take time and was unlikely to be reached in 2025. Williams also highlighted uncertainties stemming from fiscal, trade, and regulatory shifts under the Trump administration, which could introduce new challenges for economic stability.
With key US consumer and producer price index data set for release this week, investors are closely watching for signals on the Fed’s next steps. Meanwhile, Wall Street ended Tuesday on a mixed note, with tech sector weakness weighing on the Nasdaq, while markets in Frankfurt and London reached fresh record highs.
Despite global uncertainties, Asian markets demonstrated resilience. Hong Kong’s tech stocks spearheaded a rally, while gains extended across Shanghai, Tokyo, Sydney, Seoul, Singapore, Taipei, and Jakarta. Investor confidence appears to be holding firm, with markets navigating economic signals and geopolitical risks with a measured approach.
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