TOKYO (AP) — Asian benchmarks were mostly higher on Thursday after U.S. stocks rallied to records following the Federal Reserve’s i ndication that it expects to deliver interest rate cuts later this year.

Japan’s benchmark Nikkei 225 jumped 2.0% to finish at a record high 40,815.66 after the government reported exports grew nearly 8% in February from a year earlier, in the third straight month of increase.

Shipments of cars and electrical machinery increase, helping to trim the trade deficit to about half of what it was a year earlier, at 379 billion yen ($2.5 billion).

Hong Kong’s benchmark also surged 2%, to 16,879.68, while the Shanghai Composite fell less than 0.1%, to 3,077.11, after the Chinese government announced fresh measures to support the economy.

Sydney’s S&P/ASX 200 added 1.1% to 7,782.00. South Korea’s Kospi gained 2.4% to 2,754.86.

On Wednesday, the S&P 500 jumped 0.9% to 5,224.62, an all-time high for a second straight day. It’s already gained 9.5% so far this year, a bit better than the average for a full year over the last two decades.

The Dow Jones Industrial Average jumped 1% to 39,512.13 and the Nasdaq composite roared 1.3% higher to 16,369.41. Both also hit records.

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Some of Wall Street’s nervousness coming into the day washed away after the Fed released a survey of its policy makers, which showed the median still expects the central bank to deliver three cuts to interest rates in 2024. That’s the same number as they had penciled in three months earlier, and expectations for the relief that such cuts would provide are a big reason U.S. stock prices have set records.

The fear on Wall Street was that the Fed may trim the number of forecasted cuts because of a string of recent reports that showed inflation remaining hotter than expected. The Fed has been keeping its main interest rate at its highest level since 2001 to grind down inflation. High rates slow the overall economy by making borrowing more expensive and by hurting prices for investments.

Fed Chair Jerome Powell said he noticed the last two months’ worse-than-expected reports, but they “haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road towards 2%. That story hasn’t changed.”

Powell said again that the Fed’s next move is likely to be a cut sometime this year, but that it needs more confirmation inflation is moving toward its target of 2%.

The Fed has dangerously little room for error. Cutting rates too early risks allowing inflation to reaccelerate, but cutting too late could lead to widespread job losses and a recession.

“I don’t think we really know whether this is a bump on the road or something more; we’ll have to find out,” Powell said about January and February’s inflation data. “In the meantime, the economy is strong, the labor market is strong, inflation has come way down, and that gives us the ability to approach this question carefully.”

Fed officials upgraded their forecasts for the U.S. economy’s growth this year, while also indicating they may keep the benchmark rate higher in 2025 and 2026 than earlier thought.

In the bond market, Treasury yields had a mixed reaction.

The two-year Treasury yield, which closely tracks expectations for Fed action, initially jumped before quickly giving up the gain. It eventually fell back to 4.61%, down from 4.69% late Tuesday, as traders built bets for the Federal Reserve to begin cutting rates in June.

Traders had already given up on earlier hopes for the Fed to begin cutting in March. The worry is that if the Fed waits too long into the summer, a rate cut might appear politically motivated if it comes just ahead of U.S. elections set for November.

The yield on the 10-year Treasury, which also takes into account longer-term economic growth and inflation, initially tumbled after the Fed’s announcement but then swiveled. It was later sitting at 4.28%, down from 4.30% late Tuesday.

In other trading, benchmark U.S. crude rose 41 cents to $81.68 a barrel. Brent crude, the international standard, added 50 cents to $86.45 a barrel.

The U.S. dollar slipped to 150.96 Japanese yen from 151.26 yen. The euro cost $1.0935, up from $1.0925.

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