Asian shares steadied near four‑year highs on Monday as markets entered an unusually policy‑heavy week in which the U.S. Federal Reserve’s guidance was set to be the main event. Investors said the Fed’s “dot plot” projections and Chair Jerome Powell’s interpretation of those projections would be decisive in determining whether the market’s easing narrative is reinforced or forced to recalibrate.

Futures markets already embed roughly 125 basis points of cuts by late 2026, a build‑up that leaves little room for disappointment. “The key question for the September FOMC meeting is whether the Committee will signal that this is likely the first in a series of consecutive cuts,” said David Mericle, chief U.S. economist at Goldman Sachs. If the Federal Open Market Committee signals a single, cautious cut rather than a sequence of reductions, traders warn volatility could spike as bond yields and the dollar adjust.

The Fed decision follows a wave of central bank activity elsewhere. The Bank of Canada is widely expected to trim its policy rate by 25 basis points this week, while the Bank of Japan and Bank of England meet and are forecast to hold policy steady. That mix underscores a tentative global shift from the inflation‑fighting tightening cycle that dominated 2022–23 to a more nuanced phase in which easing can be selective and timing varies by economy.

For Asian markets, the potential consequences are material. A clearly dovish Fed that signals a sustained cutting cycle would likely depress U.S. Treasury yields and the dollar, supporting equity valuations and encouraging capital flows into risk assets and emerging markets. Sectors that are sensitive to interest rates, including technology and real estate developers, could see renewed momentum. By contrast, a less dovish Fed would probably push long‑term yields higher and lift banks’ margins, but could also squeeze rate‑sensitive parts of the market and weigh on currency‑pegged Asian assets.

Traders said the Fed’s communication on the path and pace of easing will matter as much as the vote itself. The dot plot — the Fed officials’ private projections for the federal funds rate — can either lock in expectations for multiple cuts or leave markets questioning the committee’s commitment to a prolonged easing cycle. “Investors have priced in a narrative. The Fed has to either confirm it or markets will reprice rapidly,” said an Asian FX strategist at a global bank, speaking on condition of anonymity.

Beyond the immediate market moves, the week highlights an important structural shift in the global macro landscape: central banks are transitioning from a defensive anti‑inflation stance to active management of slowing growth and financial stability risks. How smoothly that transition occurs will influence cross‑border capital flows, corporate borrowing costs and asset allocation decisions for months to come.

For now, Asian investors are choosing patience. The tone from Washington this week will likely dictate whether the region’s recent gains extend or give way to a bout of repositioning across equities, bonds and currencies.