Asian Stocks Soar as Rate Hike Bets Cool Amid Cooling Inflation

Asian markets rallied on September 4, 2026, as investors tempered their bets on a Federal Reserve rate hike. Market expectations for a quarter-point increase in September dropped to around 50%, down from earlier in the week when it was priced at 70%.

This shift in outlook followed comments from Fed Governor Christopher Waller, who said he would support holding interest rates steady if inflation continues to move toward the central bank's 2% target. Recent data showed U.S. inflation cooling to 3.7% in July, compared to 4.1% in May.

The Japanese yen saw its strongest daily rise in over a month, climbing near 155 per dollar. Meanwhile, the U.S. dollar weakened against a basket of currencies, hitting its lowest level since May.