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The iconic Shibuya crossing, renowned as the world’s busiest pedestrian intersection, aptly symbolizes the bustling energy reflected in the Asia-Pacific markets this Thursday. Investors were buoyed by the actions of the Federal Reserve, which issued its third interest rate cut of the year, injecting optimism across the region.
In a move that was widely anticipated, the U.S. central bank lowered the Federal Funds rate by 25 basis points, bringing it down to a range of 3.5% to 3.75%. The Fed’s decision was accompanied by a hint that this might be the last rate reduction for the foreseeable future, as they assess the impact on the economy.
During a press briefing following the meeting, Federal Reserve Chair Jerome Powell expressed confidence in the current rate levels. “We are well-positioned to wait and see how the economy evolves,” Powell stated, emphasizing that the current stance allows the Fed to monitor economic developments without immediate pressure to adjust rates further.
Powell also highlighted the influence of President Donald Trump’s trade policies, particularly tariffs, as a contributing factor to inflationary pressures. This acknowledgment suggests a complex interplay of domestic and international factors that the Fed must navigate as it steers monetary policy.
Fed Chair Jerome Powell, at his post-meeting news conference, said the reduction puts the Fed in a comfortable position as far as rates go.
“We are well-positioned to wait and see how the economy evolves,” Powell said, and noted President Donald Trump’s tariffs have been a driver of inflation.
Japan’s Nikkei 225 started the day up marginally, while the broad-based Topix was 0.36% higher.
South Korea’s Kospi rose 0.51%, and the small-cap Kosdaq gained 0.64%.
Hong Kong Hang Seng index futures were at 25,602, higher than the index’s last close of 25,540.78.
Australia’s S&P/ASX 200 climbed 0.79% in early trade.
On the commodities front, prices of silver rose to a fresh record high of $62 per ounce, according to LSEG data.
In addition to the rate decision Wednesday, the Fed also announced it will resume buying $40 billion in Treasury bills, beginning Friday. Short-term Treasury yields moved lower as a result.
The central bank also addressed the weak labor market in its statement, removing language stating that it “remained low.” This suggests its focus is shifting to supporting the economy, away from inflation.
Overnight in the U.S., the Dow Jones Industrial Average jumped on Wednesday, climbing 1.1% after the Fed decision, while the S&P 500 advanced 0.7% and the Nasdaq Composite increased 0.3%.
— CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
