Why has the Federal Reserve kept interest rates high for so long?

The Federal Reserve has left its key interest rate unchanged for its fourth-straight meeting

The Federal Reserve has left its key interest rate unchanged for its fourth-straight meeting.

The upshot for consumers: The cost to borrow money — whether through credit cards, for auto loans or mortgages — won't be changing substantially anytime soon.

The Federal Reserve sets the benchmark interest rate for all other borrowing rates in the U.S. economy. This is known as the federal funds rate.

Right now, the federal funds rate target sits at between 4.25% and 4.5%. To be sure, the Fed does not directly control interest rates for consumer borrowing, but the federal funds rate serves as a type of baseline for the way banks set their own interest rates for customers seeking credit and loans.

It's why the average credit card annual percentage rate (APR) has been stuck at about 25% for as long as the Fed has been holding its key rate at the current levels — about six months.