Fed pause reveals inflation divide as Australian Dollar stays firm

• Following the Fed's widely anticipated rate decision, AUD/USD trades steadily.
• 3.75%-4%: Fed leaves rates unchanged as two officials favour an increase.
• Further tightening remains possible amid robust US growth and high inflation.

AUD/USD trades at 0.7056. The Australian Dollar is holding firm against the US Dollar following the Federal Reserve's decision to leave interest rates unchanged, even as US inflation remains well above its 2% target. Two members opposed the decision, favouring a quarter-percentage-point increase.

Two dissenters back tightening as Fed holds rates; AUD/USD stays resilient

Rates remained at 3.75%–4% after Wednesday's Fed decision. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, voting instead for a 25-basis-point increase.

Describing economic activity as expanding, the Fed said domestic spending “has been resilient, that productivity growth is strong and that capital investment is robust,” and highlighted strong productivity growth. On its employment mandate, the central bank stated: “Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

Although inflation remains elevated, the central bank opted against raising rates. It is gathering further information to assess the appropriate policy stance.

AUD/USD – Daily Price Chart