Asian Stocks Rise After Rate Statements

On October 16, 2026, Asian and European stock markets rose as traders reduced bets on interest rate hikes after Fed Chair Kevin Warsh did not signal an urgent need for policy tightening, despite this week's inflation data exceeding forecasts. The dollar slightly weakened.

The MSCI Asia-Pacific Index added 1.4%, futures on the S&P 500 and Nasdaq 100 rose by 0.2%, and European stocks opened with a 0.8% increase. Sentiment improved partly due to Warsh's comments on the benefits of AI for the US economy and the easing of the chipmaker sell-off. Warsh did not comment on policy and forecasts, only confirming that the Fed will ensure price stability.

Charu Chanana, Chief Investment Strategist at Saxo Markets, noted: "Warsh's reluctance to commit to another rate hike reduces some bets on a Fed increase. His statement that he does not prejudge the outcomes of meetings after hot inflation data does not support the dollar." After Warsh's speech, traders cut the probability of a rate hike this month to 15% from more than 25% on Thursday. The Bloomberg Dollar Spot Index lost 0.1% after a 0.3% drop in the previous session—the strongest decline in over a month. Gold holds at $4,172/ounce, and Brent fell by 0.7% to $105.20.

Investors awaited Warsh's speech in Bangkok, looking for signals on policy direction: US inflation accelerated at the fastest pace in five months, driven by oil amid the Middle East conflict. "We have made it clear that we will ensure price stability and have reduced some easing from last month," Warsh said. "I do not prejudge the outcomes of meetings and do not think it is right to speak about what I might do at the remaining meetings of the year." The Fed raised the rate by 0.25 percentage points in September—for the first time since 2023—with the support of all 19 FOMC members, and most expect another increase this year.

Weiliang Zhang from DBS Bank: "Markets were reassured by Warsh's reiteration that AI will support productivity in the medium term, which may help reduce inflation expectations and ease concerns about a second consecutive hike."