Fed officials vote to hold interest rates steady at 23-year-high - here's what it means for YOUR wallet

The Federal Reserve has voted to hold interest rates steady at their current 23-year-high, officials announced today.

The decision spells misery for households who are already struggling under the weight of soaring interest rates on credit cards, mortgages and personal loans.

It marks the sixth consecutive time that the Fed has chosen to keep rates at their current level as it battles to tame inflation. 

The rate of annual inflation rose to 3.5 percent in March, still well above the Fed's 2 percent target. 

In a policy statement released today, the organization said rates will not be slashed until officials have 'greater confidence that inflation is moving sustainably toward 2 percent.'

The Federal Reserve has voted to hold interest rates steady at their current 23-year-high, officials announced today

Fed Chair Jerome Powell avoided answering whether three rate cuts are possible this year

It also highlighted a 'lack of further progress' in bringing down prices. 

Wall Street stocks wavered before trending higher on Wednesday afternoon. The S&P 500 was up 0.43 percent while the Dow Jones Industrial Average also increased 0.7 percent.

At the start of the year, Moody's Analytics had predicted there could be as many as four interest rate cuts this year as the economy had showed signs of cooling.

But that trajectory has been thrown into doubt as inflation has remained unexpectedly sticky. 

Fed Chair Jerome Powell avoided answering whether three rate cuts are possible this year. 

In a post-announcement press conference this afternoon, he appeared to double down on the body's 'wait-and-see' approach.

'My expectation is that we will, over the course of this year, see inflation move back down,' he said. 

However, he added: 'My confidence in that is lower than it was because of the data that we’ve seen.'

The Fed's relentless campaign to hike interest rates has taken borrowing costs from an all-time low of 0.5 percent in April 2020 to 5.5 percent today.

In theory, higher interest rates should encourage consumers to spend less and therefore slow down price increases.

One of the biggest victims of higher rates have been mortgages. The rate offered on a 30-year fixed-rate mortgage hit 7.17 in the week to April 25.

The decision spells misery for households who are already struggling under the weight of record-high interest rates on credit cards, mortgages and personal loans

Mortgage rates are not directly influenced by the Fed's benchmark rate but do track the yield on 10-year Treasury bonds. 

The bonds are influenced by several factors including predictions around inflation, Fed actions and investor reactions as a result. 

Other home loans such as Adjustable-Rate Mortgages (ARMs) - which are gaining popularity - are more closely tethered to the Fed's moves.

Meanwhile the average interest on a credit card is 20.66 percent, according to figures from Bankrate.

Credit cards are one of the few borrowing vehicles to offer a variable rate - meaning they change in-line with the Fed's funds rate.

The cost of auto-lending has also shot up. The average rate on new car loans in March was 7.4 percent, data from Edmunds.com shows.

In brighter news, higher interest rates should ideally give rise to better interest deals on savings accounts - though this does not always align.

According to Bankrate, several online providers including Jenius bank, LendingClub, EverBank and BaskBank are currently offering rates above 5 percent.