Asian shares extended their rally on Friday, bathing in the afterglow of an outsized interest rate cut in the United States, while the yen was jittery ahead of a monetary policy decision in Japan as traders look for clues about future tightening.

The Federal Reserve’s shift to interest-rate cuts bodes well for Asian assets as many are underowned, and have better earnings prospects and more room to benefit from easing than their global peers.

The Bank of Japan left interest rates unchanged on Friday, but governor Kazuo Ueda said further hikes remain on the cards if the economy grows as predicted.

The Bank of England has held interest rates at 5 per cent after inflation remained steady in August, but indicated it may lower borrowing costs again as soon as November. The Monetary Policy Committee’s eight-to-one decision on Thursday came after it cut borrowing costs by a quarter point at its meeting last month.