Expectations are for the US central bank to hold fire at the end of its meeting Wednesday -- after 10 straight hikes -- as data suggested the economy remained healthy but was showing signs that the tightening measures were kicking in.
Analysts said bets are on a pause for another increase next month, though they warned that a forecast-busting reading on the consumer price index could force officials to keep lifting.
Optimism that borrowing costs will be held -- traders have priced in a 20 percent chance of a hike -- has helped push stocks higher this month, with the S&P 500 now in a bull market, having risen 20 percent from its October lows.
"The committee is expected to skip the June meeting but still pair that with hawkish communications to counter any sense that a June pause trumpets the end of their hiking campaign," said SPI Asset Management's Stephen Innes.
"However, a big upside surprise in today's CPI could move the rate hike needle for June up to and above 50-50."
After a strong performance on Wall Street, Asia struggled in the morning but picked up as the day wore on.
Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Wellington, Mumbai, Bangkok, Manila, Jakarta and Taipei rose, while London, Paris and Frankfurt jumped in the morning.
The Fed decision comes as central banks around the world continue to struggle in their battle against inflation, which remains well above their two percent targets.
The European Central Bank is expected to unveil another increase Thursday despite the eurozone dipping into recession, while the Bank of Japan is tipped to stand pat when it meets Friday.
Canada and Australia announced increases last week.
But China on Tuesday announced a small cut in its short-term lending rates as authorities try to kickstart a recovery in the economy, which has run out of steam after an initial burst following the lifting of zero-Covid restrictions.
The move comes after figures showed inflation remained subdued and saw the yuan drop against the dollar, though the currency pared the losses on reports that fresh stimulus measures were being discussed.
The cut reveals "growing concerns among policymakers about the health of China's recovery", Capital Economics economist Julian Evans-Pritchard wrote in a note.
China's ongoing problems remained a weight on the crude market as investors fretted over the impact on demand, even after Saudi Arabia's surprise decision to slash output by a million barrels a day next month.
WTI is down about 15 percent this year and Brent has lost around 13 percent.
Both contracts rose Tuesday but made little headway into the four percent losses suffered the day before as Goldman Sachs slashed its price forecast for the third time in six months.
- Key figures around 0810 GMT -
Tokyo - Nikkei 225: UP 1.8 percent at 33,018.65 (close)
Hong Kong - Hang Seng Index: UP 0.6 percent at 19,521.42 (close)
Shanghai - Composite: UP 0.2 percent at 3,233.67 (close)
London - FTSE 100: UP 0.3 percent at 7,589.70
Euro/dollar: UP at $1.0799 from $1.0762 on Monday
Pound/dollar: UP at $1.2564 from $1.2510
Dollar/yen: DOWN at 139.50 yen from 139.56 yen
Euro/pound: DOWN at 85.95 percent from 86.00 pence
West Texas Intermediate: UP 0.9 percent at $67.72 per barrel
Brent North Sea crude: UP 1.2 percent at $72.67 per barrel
New York - Dow: UP 0.6 percent at 34,066.33 (close)
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