Fed Holds Rates Steady, Australian Inflation Cools Amid Tech Sector Split

The US Federal Reserve (Fed) kept interest rates unchanged at 3.5-3.75% for its fifth consecutive meeting, despite three officials voting in favor of a hike.

The decision was seen as a divided one, with the market now pricing in a September rate increase at around 60%. The Fed cited sticky services prices and energy costs as reasons for holding off on a rate rise, but acknowledged that inflation remains a concern.

Australia's inflation cooled slightly, with headline inflation easing to 3.9% and the trimmed mean remaining steady at 3.6%, both slightly softer than expected. The Reserve Bank of Australia (RBA) is widely expected to keep interest rates on hold next week, but markets will be watching for any hints of future rate moves.

The tech sector was split, with Microsoft and Amazon rising on strong cloud growth, while Meta and Apple fell due to ballooning costs and free cash flow collapse. The ASX 200 has held up relatively better than US indices through the earnings season, despite some volatility in the Australian market.