Asian markets were mixed on Wednesday following a lukewarm performance by stocks on Wall Street, after minutes from the Federal Reserve’s latest meeting showed policymakers preferred to keep interest rates high for a long time to keep inflation in check.
Minutes released Tuesday showed Fed officials agreed to maintain a “restrictive stance” on monetary policy until inflation continues to fall to the 2 percent target set by the central bank. The cautious stance tempered some market optimism that the Fed could turn to rate cuts as early as early next year.
Despite the Fed’s tough stance, Asian traders took the opportunity to consolidate gains from the recent stock market rally. The prospect of continued rate hikes initially pressured stocks, but investors are increasingly accepting the idea of a gradual tightening cycle.
Asian markets were mixed, mirroring the downturn in the U.S., with the major stock indexes closing modestly higher. U.S. Treasury yields, which have soared to 17-year highs in recent weeks, retreated as investors adjusted their expectations for the Federal Reserve’s policy path.
The US dollar also retreated against a basket of major currencies, reflecting investors’ reduced interest in safe-haven assets amid a more stable risk environment.
Overall, Asian markets are likely to remain cautious in the near term as investors grapple with the impact of the Fed’s continued tough stance and the possibility of further economic headwinds.
