Asian equities climbed to a two-month high on Monday as investors increased bets that the U.S. Federal Reserve could cut rates soon. Softer-than-expected inflation readings in the United States helped lift market sentiment across the region.

The rally reflected growing confidence that the Fed may have room to ease policy if price pressures continue to cool. Traders responded by buying risk assets, pushing regional benchmarks higher and extending gains seen in recent sessions.

Markets in Asia are closely tracking the outlook for U.S. monetary policy because it affects borrowing costs, capital flows, and demand for exports. A rate cut would likely be welcomed by investors looking for relief after a prolonged period of tighter financial conditions.

Still, analysts cautioned that the outlook remains tied to upcoming economic data and the Fed's next signals. If inflation or labor-market figures turn less supportive, expectations for near-term easing could shift quickly.