Asian stocks set to mostly rise after Federal Reserve projects US GDP surge

 Asian stocks were set for modest gains after the Federal Reserve pledged to keep monetary policy and rates unchanged and projected a rapid jump in US economic growth this year as the pandemic eases

By Elizabeth Dilts Marshall

NEW YORK (Reuters) - Asian stocks were set for modest gains on Thursday after the Federal Reserve pledged to keep monetary policy and rates unchanged and projected a rapid jump in U.S. economic growth this year as the COVID-19 crisis eases.

Japan's Nikkei 225 futures added 0.12%, while Hong Kong's Hang Seng index futures rose 0.68%.

Australia's S&P/ASX 200 index, however, dipped 0.1% in early trading while E-mini futures for the S&P 500 rose 0.08%.

While inflation is expected to reach 2.4% this year, above the central bank's 2% target, Fed Chair Jerome Powell called it a temporary surge that will not change the Fed's pledge to keep its benchmark overnight interest rate near zero.

"If the Fed isn't going to induce tightening, it's very bullish for risky assets," said Teresa Kong, head of fixed income and portfolio manager at Matthews Asia. "We should be seeing a mild rally in Asian assets and currencies."

The Fed projected the U.S. economy will grow by 6.5% this year - the largest annual output growth since 1984 - thanks in part to massive federal fiscal stimulus and optimism around the success of coronavirus vaccines.

"It's sort of shocking ... that officially the United States government believes it will grow faster than the Chinese government believes it will grow this year," said Christopher Smart, chief global strategist at Barings Investment Institute in Boston, calling it a "head-turning moment for investors." The S&P 500 closed at a record high and the Dow Jones Industrial Average closed above 33,000 points for the first time on Wednesday, bolstered by the Fed's strong economic forecast and Powell's comments that it is too early to discuss tapering-off measures. The Dow Jones Industrial Average rose 0.58%, while the S&P 500 gained 0.29%.

The Nasdaq Composite climbed 0.4% and remains down about 4% from its Feb. 12 record-high close.