Wall Street stocks rallied while the dollar pulled back against the yen as the Federal Reserve kept interest rates steady, opting against hiking for the second straight time.
The Fed's decision means its benchmark lending rate will hold at a 22-year high of between 5.25 percent and 5.5 percent.
Since peaking at more than seven percent in June 2022, inflation as measured by the Fed's favored yardstick has slowed by more than half -- although it remains stuck firmly above three percent.
While Fed Chair Jerome Powell said there was still work to do to rein in inflation, markets appeared skeptical that the central bank will hike again.
"The Fed tried to deliver a hawkish hold but Wall Street is not believing additional tightening will happen this cycle," said Oanda's Edward Moya.
During a press conference, Powell acknowledged that financial conditions had tightened and described as balanced the benefits and costs of further tightening actions.
Analysts also pointed to US data that suggested economic softening, including weaker than expected manufacturing activity and lackluster private-sector hiring.
All three major indexes advanced, with the broad-based S&P 500 winning just over one percent.
Earlier, European bourses had advanced, along with Japan's Nikkei, which jumped more than two percent following the latest drop in the yen.
Bank of Japan (BoJ) officials on Tuesday had stopped short of fully tweaking its monetary policy, announcing only a minor change to its yield curve control program.
The news battered the yen, and on Wednesday it continued to fall, hitting 151.72 per dollar, its weakest level since touching a 32-year-low 151.95 in October last year and spurring an intervention.
The yen later recovered somewhat, advancing after a Japanese currency official suggested a possible intervention.
The Japanese currency also gained ground against the dollar after the Fed decision.
- Key figures around 2100 GMT -
New York - Dow: UP 0.7 percent at 33,274.58 (close)
New York - S&P 500: UP 1.1 percent at 4,237.86 (close)
New York - Nasdaq: UP 1.6 percent at 13,061.47 (close)
London - FTSE 100: UP 0.3 percent at 7,342.43 (close)
Frankfurt - DAX: UP 0.8 percent at 14,923.27 (close)
Paris - CAC 40: UP 0.7 percent at 6,932.63 (close)
EURO STOXX 50: UP 0.8 percent at 4,091.71 (close)
Tokyo - Nikkei 225: UP 2.4 percent at 31,601.65 (close)
Hong Kong - Hang Seng Index: DOWN 0.1 percent at 17,101.78 (close)
Shanghai - Composite: UP 0.1 percent at 3,023.08 (close)
Dollar/yen: DOWN at 150.89 yen from 151.68 yen on Tuesday
Euro/dollar: DOWN at $1.0573 from $1.0575
Pound/dollar: DOWN at $1.2150 from $1.2153
Euro/pound: DOWN at 87.00 pence from 87.01 pence
Brent North Sea crude: DOWN 0.5 percent at $86.63 per barrel
West Texas Intermediate: DOWN 0.7 percent at $80.44 per barrel