The Federal Reserve on Wednesday held interest rates steady for the fourth straight time. The widely expected decision left interest rates unchanged at a range of 5.25% to 5.5%, the highest level in 22 years. 

Hiking interest rates tends to create higher rates on consumer and business loans, which then slows the economy by forcing employers to cut back on spending. Higher rates have helped push the average rate on 30-year mortgages above 8% for the first time in decades. Borrowing costs for everything from home equity lines of credit, auto loans and credit cards have also spiked.

In the span of just 16 months, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s. While inflation has cooled considerably in recent months, it remains up 3.4% compared with the same time a year ago, according to the most recent Labor Department data. Even with the recent declines, Americans continue to pay more for a number of necessities including food, medical care and rent. 

FED'S FIGHT AGAINST INFLATION IS WEIGHING ON MIDDLE-CLASS AMERICANS

Yet the rapid rise in rates has not stopped consumers from spending or businesses from hiring. 

The labor market is continuing to chug along at a healthy pace, with employers adding 216,000 new workers in December. Job openings remain high, and the unemployment rate is continuing to hover around 3.7%.

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