Asian shares up, US dollar wallows as Fed soothes inflation fears

 Asian shares rose on Wednesday while the U.S. dollar stood near its lowest levels this year after U.S. Federal Reserve officials reaffirmed a dovish monetary policy stance

By Andrew Galbraith

SHANGHAI (Reuters) - Asian shares rose on Wednesday while the U.S. dollar stood near its lowest levels this year after U.S. Federal Reserve officials reaffirmed a dovish monetary policy stance, providing yet more assurance to investors worried about the inflation outlook.

Richard Clarida, the Fed's vice chair, said on Tuesday that the U.S central bank would be able to curb an outbreak of inflation and engineer a "soft landing" without throwing the country's economic recovery off track.

All the same, Clarida's comments reflect a shifting tone at the Fed. A month ago, Fed Chair Jerome Powell said it was "not yet" time to even contemplate discussion of policy tapering, but more recently policymakers have acknowledged they are closer to debating when to pull back some of their crisis support for the U.S. economy.

That uncertainty weighed on U.S. stocks overnight, with the Dow Jones Industrial Average down 0.24%, the S&P 500 off 0.21% and the Nasdaq Composite 0.03% lower.

But in Asia, the soothing Fed comments helped to boost sentiment.

"The messages were not necessarily new but they reinforced the prevailing consensus still that the bulk of the surprise in April (CPI) can be traced to transitory elements," said Stefan Hofer, chief investment strategist at LGT in Hong Kong.

"The proof is in the pudding so to speak over the coming months, how much of the CPI increase is structural and how much of it is transitory. And the jury is I would say still out on that, but the Fed is sticking to its guns and markets seem to be by and large still comfortable with that."

U.S. consumer prices increased more than expected in April as booming demand amid a reopening economy pushed against supply constraints.