Summary
The Federal Reserve held its federal funds rate at 3.50%-3.75% on 29 July 2026 — a 9-3 vote with three dissenting members favouring an immediate 25bp hike; the first three-way dissent since September 2016. This decision is part of ongoing discussions surrounding the Federal Reserve July 2026.
Chair Warsh explicitly rejected the idea of a “pause” — framing the hold as a “rigorous review” and warning the decision is “merely the beginning of a story, not the end”; markets now price one to two hikes by end of 2026, with September the most likely timing
A stronger USD is possible if a September hike is delivered — which would mean fewer US dollars per AUD or NZD for senders; Australians and New Zealanders sending money to the USA may want to act while the USD remains at current levels
The Federal Reserve held interest rates steady on 29 July 2026 — but the hawkish undercurrent of the decision was hard to miss. Three members of the Federal Open Market Committee (FOMC) dissented in favour of an immediate rate hike. Chair Kevin Warsh refused to call the decision a pause. And markets immediately began pricing a September hike as the new base case.
For Australians and New Zealanders sending money to the United States — for university fees, mortgages, family support or business payments — the direction of US interest rates matters. Higher US rates mean a stronger USD, which means fewer US dollars per AUD or NZD transferred.
What happened
The FOMC voted 9-3 to hold the federal funds rate at 3.50%-3.75% at its 29 July meeting. The three dissenting members all favoured raising rates by 25 basis points to 3.75%-4.00% — the first time since September 2016 that three policymakers dissented with a unified view on direction.
Why three members wanted to hike:
- Core PCE (the Fed’s preferred inflation measure) accelerated from 3.0% in December 2025 to 3.4% in May 2026
- Oil prices surged from near $57 per barrel at the start of the year to a peak of $113 in April, driven by the Middle East conflict and disruption to the Strait of Hormuz
- Elevated inflation, primarily from higher energy prices, increased expectations for higher policy rates
Why the majority held:
- Tighter financial conditions — higher nominal and real interest rates already reflected market tightening
- Chair Warsh noted that existing financial conditions were already doing some of the work that a rate hike would achieve
- The July meeting was framed as a time for the Committee to do its “homework” — resolving hard questions before the September meeting
Warsh’s message: this is not a pause
Chair Kevin Warsh was direct in his post-meeting press conference: “I wouldn’t characterise what we did as anything like a pause. I would characterise what we did as a rigorous review of the economic situation.”
He added: “I would characterise it as a view of what our own homework is to try to resolve those questions in the period ahead” — and that while rates were not changed today, “this is merely the beginning of a story, not the end.”
Warsh also reiterated his “no tolerance” stance on inflation, having previously emphasised that the Fed would not accept above-target inflation as a new normal. This hawkish framing reinforced market expectations that the September meeting will deliver a hike.
What markets are now pricing
Following the decision, investors now anticipate between one and two rate hikes by the end of 2026. September is the most likely timing for the first move, with December as the second potential date.
Ian Lyngen, head of US rates at BMO Capital Markets: “We’re reading this as a Committee with vocal hawks.”
What it means for AUD/USD and NZD/USD
The Fed’s rate path directly affects the USD — and therefore the AUD/USD and NZD/USD exchange rates.
If the Fed hikes in September:
- USD strengthens as higher US yields attract global capital
- AUD/USD and NZD/USD could weaken — meaning fewer US dollars per AUD or NZD
- Australians and New Zealanders sending money to the USA would receive less per dollar sent
If oil prices ease and the Fed holds again in September:
- USD remains broadly stable
- AUD/USD and NZD/USD holds near current levels
- Less urgency to time transfers
The current position: The AUD and NZD are both broadly supported by their own domestic factors — Australia’s commodity export earnings and the RBNZ’s rate hike cycle. But a September Fed hike would add USD strength that could offset these supports.
Key dates ahead
| Date | Event | Impact |
|---|---|---|
| 11 August | RBA rate decision | All AUD corridors |
| 2 September | RBNZ rate decision | All NZD corridors |
| September 2026 | Federal Reserve meeting | USD direction — September hike widely expected |
| 10 September | ECB rate decision | EUR corridors |
Sending money to the USA with OrbitRemit
- AUD to USD: AUD $4 flat fee (fee-free above AUD $10,000)
- NZD to USD: NZD $4 flat fee (fee-free above NZD $10,000)
- Rate locked at confirmation — no hidden margin
- Set a rate alert to be notified when AUD/USD or NZD/USD hits your target
FAQ’s (frequently asked questions)
What did the Fed decide on 29 July 2026?
The FOMC held the federal funds rate at 3.50%-3.75% in a 9-3 vote. Three members dissented in favour of an immediate 25bp hike — the first three-way hawkish dissent since September 2016.
Will the Fed hike rates in September 2026?
Markets now price one to two hikes by end of 2026, with September as the most likely timing. Chair Warsh explicitly rejected the idea of a pause, framing the July hold as a “rigorous review” ahead of further action.
How does the Fed rate decision affect the AUD and NZD?
Higher US interest rates attract global capital into USD-denominated assets, strengthening the USD. A stronger USD means the AUD and NZD buy fewer US dollars — Australians and New Zealanders sending money to the USA would receive less per dollar sent.
How much does it cost to send money from Australia to the USA?
AUD $4 flat fee with OrbitRemit. Fee-free above AUD $10,000. Check current AUD/USD rates at orbitremit.com.
This article is based on confirmed Federal Reserve decisions and analyst commentary published 29-31 July 2026. Exchange rates fluctuate — check current rates at orbitremit.com before transferring. Last updated 1 August 2026.
Sources: US Bank — Federal Reserve Holds Rates at 3.50%-3.75% in July 2026 (31 July 2026) | CNBC — Fed rate decision July 2026: Divided Fed holds interest rates steady (29 July 2026) | CNBC — Fed meeting recap July 2026 (29 July 2026) | U.S. News — Fed Holds Rates Steady, but 3 Members Favored a Rate Hike (29 July 2026)
