The Federal Reserve held interest rates steady on Wednesday and indicated that moderate U.S. economic growth and strong job gains would offer opportunities for it to tighten policy this year.
The U.S. central bank, however, pointed to ongoing risks from an uncertain global economy which could lead to rate hikes sooner than anticipated.
The Fed kept the target range for its overnight lending rate at 0.25 percent to 0.50 percent, saying that "A range of recent indicators, including strong job gains, points to additional strengthening of the labor market. Inflation picked up in recent months."
Asian Markets Rally
Meanwhile, emerging markets celebrated the Federal Reserve’s decision as stocks rallied and South Korea’s won jumped the most in more than four years to lead currencies higher.
Asian shares gained across the board with MSCI's broadest index of Asia-Pacific shares outside Japan climbing to a two-month high, up 1.9 percent.
Australian stocks added 1 percent and Shanghai .SSEC was up 1 percent. Japan's Nikkei pared earlier gains and fell 0.6 percent as the dollar slipped versus the yen.
The S&P 500 closed at its highest in 2016, leading global stock gains, while the U.S. dollar weakened and both oil and gold moved higher on the Fed news. The Nasdaq Composite added 35.30 points, or 0.75 percent, to 4,763.97.
According to Brian Dolan, head market strategist at DriveWealth LLC in New Jersey, "The Fed struck a very dovish tone, marking down its projected rate increase trajectory, while noting overall resilience in the U.S. economy and the absence of inflation pressures. This should be encouraging for risk sentiment and risk assets."