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The Federal Reserve left interest rates unchanged at its meeting this week, ABC News reports.

What’s going on: “The fed funds rate remains between 5.25% and 5.5[0]%.… This is the fourth meeting in a row that the Fed has not raised rates—the longest pause on the aggressive rate hiking cycle that started in March 2022.”

• While the central bank noted “solid” economic growth and still-strong (but cooling) job gains, it also restated its goal of 2% inflation.
• In December, the consumer price index—a key measure of inflation—came in significantly higher than that, at 3.4%, according to the Bureau of Labor Statistics.

Why it’s important: “An aggressive series of rate hikes since last year has spurred an increase in borrowing costs for everything from mortgages to credit cards to auto loans. But the Fed has signaled that it plans to ease rates in response to falling inflation,” ABC reports.

• However, cutting rates too quickly could raise inflation again—and the Fed “won’t be ‘rushed’ to make the decision soon,” Federal Reserve Gov. Christopher Waller said earlier in January.

What it means: “This will put a damper on expectations for cuts in the federal funds rate at upcoming meetings, including the next two,” said NAM Chief Economist Chad Moutray. “It does not mean that rate reductions are off the table, but it does suggest that more progress will need to be seen before the [bank] can shift its monetary policies.”