SINGAPORE (Reuters) -Asian stocks hovered near two-year highs on Wednesday on growing bets of imminent U.S. rate cuts, while the New Zealand dollar slid after its central bank signalled greater confidence that inflation was coming to heel.

The Reserve Bank of New Zealand (RBNZ) held its cash rate steady at 5.5% on Wednesday as expected, but noted that inflation was expected to return to its target range of 1% to 3% in the second half of the year.

The kiwi fell more than 0.7% in the aftermath of the decision to $0.6079 as analysts said the tone from policymakers was comparatively more dovish than that of May's policy decision.

"Them kind of saying the CPI is going to drop back into target in the second half of this year... that CPI expectations could normalise more rapidly, I think that contributed," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

"Compared to the more hawkish statement, the tone they had in the May meeting, that stood out."

Traders were also quick to ramp up bets of rate cuts from the RBNZ later this year, with swaps now implying about 30 basis points worth of easing in October, as compared to 16 bps prior to the outcome.

The Aussie, meanwhile, rallied more than 0.6% to touch an over one-year high against the New Zealand dollar, with the former underpinned by wagers that the next move in Australian rates might be up given inflation is proving stubborn.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.09% and remained close to the more than two-year high hit at the start of the week.

Japan's Nikkei rose 0.13%, while Hong Kong's Hang Seng Index climbed about 1%.

Chinese blue chips ticked 0.19% higher.

Stocks have rallied globally on the back of growing expectations of a Fed easing cycle likely to commence in September, with Powell saying on Tuesday that the U.S. is "no longer an overheated economy".

However, Powell provided little clues on how soon those rate cuts could come.

"He suggested that the Fed's reaction function is shifting to an easing bias given the significantly cooling labour market, but he nonetheless declined to offer a clear timeline on rate cuts," said RBC Capital Markets' Tan.

"In any event, the market has been pricing in almost two full Fed rate cuts this year, and Powell's statements didn't shift those expectations much."

DOLLAR RESILIENT

Markets are now pricing in an over 70% chance of a Fed cut in September, compared to a near-even chance a month ago, according to the CME FedWatch tool.

Still, the rise in U.S. rate cut expectations have done little to sway the dollar, which remained broadly on the front foot on Wednesday.

That left sterling flat at $1.2787, while the euro was little changed at $1.0815.

Against the yen, the dollar rose 0.15% to 161.54, as the Japanese currency continued to be pressured by stark interest rate differentials between the U.S. and Japan.

But data on Wednesday showed Japan's wholesale inflation accelerated in June as the yen's declines pushed up the cost of raw material imports, keeping alive market expectations for a near-term interest rate hike by the central bank.

The Bank of Japan said on Tuesday that some market players called on the central bank to slow its bond buying to roughly half the current pace under a scheduled tapering plan due this month.

Elsewhere in Asia, data on Wednesday showed China's consumer prices grew for a fifth month in June but missed expectations, while the producer price deflation persisted, as government support measures set a bumpy recovery in motion for the world's second-largest economy.

The onshore yuan fell to its weakest level since November in the wake of the downbeat data and last stood at 7.2757 per dollar.

Its offshore counterpart similarly fell 0.03% to 7.2902 per dollar.

In commodities, oil prices ticked lower. Brent futures fell 0.11% to $84.57 a barrel, while U.S. West Texas Intermediate (WTI) crude eased 0.01% to $81.40 per barrel.

Gold gained 0.2% to $2,368.15 an ounce. [GOL/]

(Editing by Muralikumar Anantharaman)