On Wednesday, Federal Reserve Chair Jerome Powell assured Americans that policymakers would do their best to curb surging inflation following the Fed's decision to hike interest rates by 50 basis points for the first time in 22 years.
Powell also said it would start reducing its balance sheet in June in a decision seen as less hawkish than some feared and pulled back against a 75 basis-point rate hike, saying the Fed is not "actively considering it."
The reaction to the policy statement sent stocks on their largest rally on the day of a Fed meeting in a decade.
Senior investment strategist at Allspring Global Investments said,
"at worst, the Fed wants to meet market expectations. At best, they want to go slower or lower than what the market was pricing."
MSCI's gauge of global stocks closed up 1.6%. On Wall Street, the S&P500 climbed 2.99%, the Nasdaq Composite rose 3.19%, and the Dow Jones Industrial Average rose 2.81%.
In Europe, stocks closed lower on disappointing earnings and investor uncertainty, with the pan-European STOXX600 index dropping 1.1%.
U.S. crude futures gained $5.40 to settle at $107.81 a barrel, and Brent settled up $5.17 at $110.14. With Powell flagging risks to the economy from soaring inflation, gold bounced higher, after which U.S. gold futures settled down 0.1% at $1,868.8 an ounce.
The Aussie dollar gained as much as 1.3%, while Bitcoin rose 5.68% to $39,871.90 after trading lower earlier.
Based on the Labor Department's consumer price index, March reached a 40-year inflation high causing the Fed chief and his colleagues to face mounting criticism of their slow reaction to the crisis.
On Wednesday, Powell said the central bank has been adapting as the data changed and will continue to do so.
"If higher rates are required, then we won't hesitate to deliver them," he said.
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