Global equities advanced to new highs on Friday, while the US dollar weakened, after fresh inflation data reinforced expectations that the Federal Reserve could cut interest rates in September. Investors responded to signs that price pressures are easing, improving sentiment across major markets.

The rally pushed world stocks higher as traders priced in a more accommodative policy outlook from the US central bank. Lower borrowing costs would likely support corporate earnings and ease pressure on financial conditions, giving risk assets a boost.

The move also weighed on the dollar, which tends to soften when markets anticipate a less aggressive Fed. Analysts said the latest data strengthened the case for policy easing, although the timing and size of any cut will still depend on upcoming economic releases.

For now, markets are betting that the Fed has room to act if inflation continues to cool. That has helped extend a broad-based advance in equities, even as investors remain alert to any sign that inflation or labor-market data could alter the outlook.