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Investing.com – Asian stocks were mostly up on Friday morning, with investors digesting the U.S. Federal Reserve’s new approach to setting monetary policy.
The approach will see the Fed let inflation and employment run higher, a move that will likely keep interest rates low. The result of a review that took over a year, Fed Chairman Jerome Powell said that the Fed will seek inflation averaging 2% over time and adjust its view of full employment, allowing labor-market gains to reach more workers.
“Maximum employment is a broad-based and inclusive goal… this change reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities,” Powell said in his speech at the Jackson Hole symposium on Thursday.
Some investors were positive over the new policy, which tackles years of too-low inflation rates and gives the Fed more flexibility to let the job market run hotter, as well as let price pressures float higher, before it acts.
“Monetary policy is likely to stay accommodative for even longer,” Tai Hui, chief Asia market strategist at JPMorgan (NYSE:JPM) Asset Management, told Bloomberg.
“Not only will the Fed need to provide sufficient support to help the economy through the pandemic fallout, but also policy rates should be kept low beyond that to generate sufficient inflationary pressure.”
Japan’s Nikkei 225 was up 0.64% by 11:29 PM ET (4:29 AM GMT), with Prime Minister Shinzo Abe due to hold a press conference later in the day to address his health.
South Korea’s KOSPI jumped 1.23.%. But the country stopped short of imposing phase 3 social distancing measures, the highest available, despite recording 371 new COVID-19 cases as of midnight Thursday. Phase 2 measures, originally due to expire over the weekend, have been extended for at least another week.
Down Under, the ASX 200 was down 0.50%.
Hong Kong’s Hang Seng Index gained 1.16%. China’s Shanghai Composite was up 0.51% and the Shenzhen Component gained 0.91%.
Investor sentiment was boosted after the U.S. Food and Drug Administration (FDA) granted emergency use authorization Abbott Laboratories’ COVID-19 portable antigen test. The $5 tests can deliver results within 15 minutes.
But investors are also keeping a nervous eye on the U.S. Congress’ negotiations over the latest COIVD-19 stimulus package, with Thursday’s telephone call on the package between U.S. House Speaker Nancy Pelosi and White House Chief of Staff Mark Meadows ending without a resolution.
