Investing.com– Most Asian stocks rose on Friday, tracking overnight gains on Wall Street as investors cheered a bumper interest rate cut from the Federal Reserve.

Japanese stocks outpaced their regional peers, but trimmed early gains after the Bank of Japan held interest rates steady but said it expected inflation to keep increasing.

Chinese stocks lagged as the People’s Bank of China kept its benchmark lending rate unchanged despite increasing calls for more stimulus.

Regional markets took a positive lead-in from Wall Street, where the S&P 500 and Dow Jones Industrial Average hit record highs after the Fed cut rates by 50 basis points and kicked off an easing cycle.

Gains in technology stocks were a key driver of this trade, with buying spilling over into Asian markets. But U.S. stock index futures fell in Asian trade, amid signs that the rate cut rally was now cooling.

Japanese stocks trim early gains after BOJ
Japan’s Nikkei 225 was the best performer in Asia for a second straight session, rallying 1.8%, while the broader TOPIX added 1.5%. Both indexes trimmed some early gains after the BOJ decision.

The BOJ kept interest rates unchanged in a unanimous decision, in line with market expectations. But while the central bank did not provide any overtly hawkish signals, it did flag expectations for a steady increase in consumer price index inflation.

Expectations of higher inflation have been a key driver of the BOJ’s rate hikes- of which it had two this year. The central bank expects inflation to increase on improving private consumption.