As investors processed Federal Reserve Chair Jerome Powell’s most recent remarks, in which he pledged to raise rates to combat inflation “until the job is done,” markets in the Asia-Pacific region rose.
The Nikkei 225 and Topix both had increases in Japan, 0.49% and 0.38 respectively. The S&P/ASX 200 increased 0.6% in Australia.
The Hang Seng Index in Hong Kong increased by 2.59%, and its tech index increased by 2.76%. Shanghai Composite increased by 0.7% in mainland China, followed by Shenzhen Component’s increase of 0.76%.
Consumer inflation in China decreased from 2.7% in July to 2.5% in August.
In a note, FX strategist Kristina Clifton of Commonwealth Bank of Australia said, “China’s weak growth prospects and accommodative monetary policy stance against the vigorous tightening undertaken by the FOMC will keep USD/CNH well supported.”
The offshore yuan was 6.95, while the Japanese yen and the Korean won were each 143.85 and 1,383.11 versus the dollar, respectively.
According to a report from HSBC, the People’s Bank of China has flexibility to sustain its current monetary policy given the most recent data on inflation in China.
Greater China analyst Erin Xin remarked, “The decrease in pricing pressures offers the PBOC flexibility to continue accommodating.”
According to Xin, the central bank will likely use structural instruments like “increased re-lending quotas for focus areas like manufacturing and green investment” to further loosen monetary policy.