Officials at the Federal Open Market Committee, the Fed’s policy-setting body, opted to hold the key fed funds rate flat at a range of 5.25-5.50% Wednesday, where it’s been since July, the highest since 2001. The FOMC left the door open to more rate hikes in the coming months if inflation does not cooperate with the Fed’s plans to push it down to a 2% annual rate.

“The Committee will continue to assess additional information and its implications for monetary policy," The committee said in a statement that was nearly identical to what it said at its last meeting in July. "In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."

The pause, widely expected in financial markets, gives the central bank more time to assess whether its campaign of rate hikes since March 2022 has put inflation firmly on a downward path, and to see how much damage those hikes have done to the economy by pushing up interest rates on all kinds of loans.

By raising the Fed funds rate, the Fed has put upward pressure on rates for mortgages, credit cards, business loans, and other borrowing costs with the goal of discouraging borrowing and spending, allowing supply and demand to rebalance, and keeping a lid on wage increases. By design, the hikes have made it harder for businesses to hire and expand, and for households to make big-ticket purchases for things like houses and cars.

Since the rate hikes began, cost of living increases have slowed to a 12-month increase of 3.7% as measured by the Consumer Price Index, down from the peak of 9.1% reached in June 2022. However, high interest rates could slow down the economy down so much that it falls into a recession.

High interest rates have hit some parts of the economy harder than others. They’ve paralyzed the housing market by making mortgages all but unaffordable, and have hurt the financial sector, contributing to a string of high-profile bank failures earlier in the year.

Higher rates have been music to the ears of savers, who have benefitted from the highest returns on certificates of deposit and other savings instruments in years.

Still, the overall economy has stayed more resilient than many economists had expected. Job openings have decreased but there are no signs of mass layoffs, and the economy has continued to grow, raising hopes that the Fed’s anti-inflation campaign will end with a “soft landing” of reduced inflation without an economic crash.