Asian stock markets broadly advanced on Thursday as currencies rose following Federal Reserve chairman Jerome Powell mention that the US central bank might soon shift its focus from taming inflation to curbing the economic slowdown.
A benchmark of Asian stocks climbed roughly 0.7%, with technology-heavy bourses the best performers for the day, led by the Taiwan Weighted Index and South Korea's Kospi Index.
While Tokyo's key index closed higher, the Stock Exchange of Thailand (SET) slipped in afternoon trade following an uptick in the morning session. The Hong Kong bourse also finished lower on Thursday after a late sell-off.
The region's broad increases tracked overnight gains on Wall Street after the Fed raised its key lending rate by 0.25 percentage points as widely expected by investors, to a range of 4.50-4.75%, the highest in 16 years.
Traders hope lower inflation following repeated rate hikes by global central banks will encourage regulators to scale down plans for more increases or even cut rates before 2024.
The Fed said inflation has "eased somewhat but remains elevated", with Mr Powell saying the central bank needs "substantially more evidence" that inflation is ebbing to be confident it is moving back towards the target of 2%.
"The Fed chair's statement indicated that although rate hikes would continue, there are signs inflation is slowing, showing the stringent monetary policy has proven to be successful," Maybank Securities said in its market report on Thursday.
Fed Watch Tool weighs a rate increase by another 25 basis points at the central bank's next rate-setting meeting on March 22 to a 2023 peak of 5%, marking an end to the current hiking cycle, said the report.
After the meeting, Mr Powell said the "disinflation process has started" as the US economy is losing momentum. The remark spurred market expectations that the economic fallout will push the bank to potentially cut interest rates by as early as late 2023.
The dollar index, which measures the greenback against six major peers, tumbled to a nine-month low of 100.80 following his remarks. As a result, currencies across emerging Asia surged, with the Singapore dollar hitting a five-year high of 1.3038 against the greenback.
The Philippine peso notched its highest level since June, while Indonesia's rupiah tallied a four-month high. Malaysia's ringgit rose 0.6%, while the baht gained 0.3% to reach the high 32-level to the dollar. Gold hovered around a nine-month high of US$1,950 per ounce.