Asian stocks rose on Thursday, while longer-dated US government bond yields fell and the dollar was down from two-decade highs after the US Federal Reserve delivered an aggressive rate hike and cut its growth projections.

The US central bank on Wednesday approved its biggest interest rate hike since 1994, lifting the target federal funds rate by 75 basis points to a range of between 1.5 per cent and 1.75 per cent. Fed officials also see further steady rises this year, targeting a federal funds rate of 3.4 per cent by year-end.

The move, which was fully priced in by markets, followed data on Friday showing a sharper-than-expected rise in US inflation in May, as well as a University of Michigan survey showing consumers' five-year inflation expectations jumping sharply to their highest since June 2008.

In a news conference following the Fed's latest two-day policy meeting, Fed Chair Jerome Powell said the survey was "quite eye-catching".

"(Inflation expectations) are starting to look like they're too high. That I think is one reason why Powell wanted to do a 75 ... And I think they will also go again in July," said Joseph Capurso, head of international economics at Commonwealth Bank of Australia.

"They've got to get inflation down. They're so far behind the curve it's not funny."

Investors appeared to take comfort from the view that the US economy will benefit in the long run if prices are brought under control in the short term. Fed projections showed economic growth slowing to a below-trend rate of 1.7 per cent, and policymakers expect to cut interest rates in 2024.

MSCI's broadest index of Asia-Pacific shares outside Japan tracked a higher close on Wall Street, adding 0.4 per cent in the morning session. Seoul's KOSPI added 1.24 per cent, while Australian shares rose 0.49 per cent and Chinese blue-chips added 0.12 per cent.

In Tokyo, the Nikkei was up 1.70 per cent.

Overnight, the Dow Jones Industrial Average ended the session by jumping 1 per cent. The S&P 500 leapt 1.46 per cent, and the Nasdaq Composite climbed 2.5 per cent.

The dollar, which retreated from a 20-year peak after the Fed meeting, regained some footing in the Asian session.

"It looked like a classic case of 'buy the rumour, sell the fact' as the dollar sold off and Wall Street rallied," said Matt Simpson, senior market analyst at CityIndex. "(But) given the trajectory for Fed hikes ... we very much doubt the top is in place for the US dollar."

The global dollar index, which tracks the greenback against a basket of six peers, was last up 0.24 per cent at 105.05 as the dollar jumped nearly 0.6 per cent against the yen to 134.61.

The euro edged down about 0.1 per cent to $1.0434.

Reflecting expectations for more Fed tightening, the yield on US two-year Treasury notes, which are sensitive to traders' expectations of Fed fund rates, rose to 3.3060 per cent from a close of 3.2790 per cent on Wednesday.

The US 10-year yield was lower at 3.3696 per cent from a close of 3.3950 per cent.

In commodity markets, oil prices rebounded after falling more than 2 per cent following the Fed decision. Brent crude was last up 1 per cent to $119.68 per barrel and US crude added 1.1 per cent to $116.58.

Gold was slightly lower as the dollar firmed. Spot gold last traded at $1,830.19, down 0.17 per cent on the day.

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