AUD/USD little changed as markets digest Fed interest rate decision

The Australian Dollar (AUD) trades slightly lower against the US Dollar (USD) on Wednesday, with AUD/USD stuck in a narrow intraday range as traders show a muted reaction to the Federal Reserve’s (Fed) monetary policy announcement. At the time of writing, the pair is trading around 0.6995, holding near its highest levels in nearly three years.

The Fed kept its benchmark interest rate unchanged at the 3.50%-3.75% range, in line with market expectations. The decision reflects a cautious approach as policymakers assess incoming economic data and evolving risks, following three consecutive 25-basis-point rate cuts last year

The decision passed with a 10-2 vote, with Governors Stephen I. Miran and Christopher J. Waller dissenting in favor of a 25-basis-point rate cut.

In its statement, the Fed said the economy continues to expand at a solid pace, but acknowledged that job gains have remained low and that the unemployment rate is showing signs of stabilization. Officials added that inflation remains somewhat elevated and warned that uncertainty around the outlook is still high.

The Committee said it will keep a close watch on incoming data and is prepared to adjust policy if risks emerge that could hinder progress toward its goals.