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

The U.S. 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% and 1.75%. Fed officials also see further steady rises this year, targeting a federal funds rate of 3.4% by year-end.

The move, which had been fully priced in by markets, followed data on Friday showing a sharper-than-expected rise in U.S. 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 that 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 U.S. 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%, 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 0.40% in the morning session. Seoul's KOSPI added 1.24%, while Australian shares rose 0.49% and Chinese blue-chips added 0.12%.

In Tokyo, the Nikkei was up 1.70%.

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

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 U.S. dollar."

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

The euro edged down about 0.1% to $1.0434.

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

The U.S. 10-year yield was lower at 3.3696% from a close of 3.3950%.

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

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

(Reporting by Andrew Galbraith; Editing by Lincoln Feast.)