Markets higher as Fed chair says interest rates to stay low

Asian markets were mostly higher Friday after the Federal Reserve said it might keep interest rates low even if inflation rises, in a major overhaul of its strategy.

Shares retreated in Japan, with the Nikkei 225 index losing 1.1%, to 22,955.69, after major media outlets said Prime Minister Shinzo Abe planned to announce he would step down due to a chronic health problem.

Hong Kong’s Hang Seng climbed 1.1% to 25,554.60. The Kospi in Seoul added 0.6% to 2,358.85. Sydney’s S&P/ASX 200 fell 0.8% to 6,077.30, while the Shanghai Composite index rose 0.6% to 3,370.12.

Shares fell in Taiwan and Jakarta but rose in Singapore and Bangkok.

Overnight, the S&P 500 ticked 0.2% higher, moving further into record territory and closing at 3,484.55, after Federal Reserve chair Jerome Powell said in a speech that the U.S. central bank might keep interest rates low to help prop up the pandemic ravaged economy even if inflation rises above its target level of 2%.

The hoped for change in the Fed’s strategy is a huge deal for markets that have been rescued by central banks slashing short-term interest rates and buying all kinds of bonds.

The Bank of Japan has kept interest rates near or even below zero for most of the past decade, seeking to spur inflation and entice companies and consumers to spend more.

But Japan, the world's third largest economy, has yet to see inflation hit the 2% target set by its governor, Haruhiko Kuroda, in 2013. On Friday the government reported that the consumer price index rose 0.3% in July, the down from 0.6% the month before.

Stock prices have held steady, though, even as the economy dipped into recession late last year.

Abe stepped down from a brief earlier term as prime minister in 2007, also for health reasons. An effective medication to...