Asian stocks climb as Fed holds rates

March 20, 2025 (MLN): Most Asian equities rose on Thursday after US Federal Reserve Chair Jerome Powell suggested that any tariff-driven increase in consumer prices would likely be short-lived, even as the central bank cut its growth outlook and raised inflation expectations.

Markets have been highly volatile as US President Donald Trump pursues a hardline trade policy, imposing painful tariffs on key trading partners, fueling recession fears, as APP reported. 

 Some analysts have also warned that his pledges to cut taxes, ease regulations, and restrict immigration could reignite inflation, potentially forcing the Fed to reassess its monetary policy—with some even fearing rate hikes.

After a closely watched Wednesday meeting, the US central bank kept borrowing costs unchanged for the second consecutive time, citing "increased uncertainty" about the economic outlook.

Powell reassured investors, stating: “The economy seems to be healthy.” However, he acknowledged inflation had “started to move up” and partially attributed this to tariffs, though he emphasized any price increase would be “transitory”.

His remarks, seen as market-friendly, led to a drop in 10-year US Treasury yields—a proxy for monetary policy expectations. This decline was also fueled by the Fed’s decision to slow the pace of balance sheet reduction, signalling a less aggressive monetary tightening stance.

Late Wednesday, Trump urged the Fed to "do the right thing" and cut rates immediately on his Truth Social platform.

Kerry Craig, Global Market Strategist at JP Morgan Asset Management, noted:

“The Fed doesn’t have all the answers but faces plenty of questions about how it interprets shifts in the US economy.”

He added that while the market is reassured the Fed is ready to act if needed, the overall outlook remains uncertain.

Gold surged past $3,056 as traders sought safe-haven assets amid tariff fears and geopolitical uncertainty while oil prices climbed following Israel’s most intense airstrikes on Gaza since a ceasefire with Hamas.

In Eastern Europe, tensions remained high as Trump proposed a plan for the US to operate Ukraine’s nuclear power plants to secure a ceasefire with Russia.

In response, Ukraine’s President Zelensky said he was ready to pause attacks on Russia’s energy infrastructure after Vladimir Putin agreed to halt strikes on Ukraine.

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