U.S. Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., the United States, on Nov. 2, 2022. The U.S. Federal Reserve on Wednesday implemented the fourth consecutive three-quarter point interest rate hike, amid the worst inflation in four decades. (Photo by Liu Jie/Xinhua via Getty Images)

The Federal Reserve has decided to take a break from increasing interest rates. This pause comes after 15 months of continuous rate hikes and could bring some relief to consumers dealing with higher costs for mortgages, credit cards, and other loans.

Let’s look at the impact these rate hikes have had. Since March 2022, when the Fed began raising rates to control inflation, borrowing costs have significantly increased. For example, back in early 2022, the rate for a typical 30-year mortgage was around 3.2%. But now, it has risen to 6.8%, which means the monthly mortgage payment for a $300,000 home has gone up by 50%. Credit card interest rates have also hit record highs, surpassing 20%, and the costs of other loans have gone up too.

The central bank raised rates to tackle the highest inflation we’ve seen in 40 years. The good news is that recent data shows progress. The Consumer Price Index for May rose at the slowest pace in two years, indicating that the efforts to control inflation are starting to work. Because of this positive development, economists expected the Fed to hold off on another rate hike for now. They want to assess the strength of the economy and make sure they’re not tightening monetary policy too much by mistake.

While pausing the rate hikes is definitely better than continuing them, it’s important to acknowledge that the impact of the previous increases has already taken a toll. The future is still uncertain regarding whether this pause will be short-term or a longer-term change. We’ll have to wait and see if there will be any further rate hikes going forward.