US interest rates held steady and economy grows - what it means for you

In its decision to hold rates steady this month, the Fed said that while inflation remains high, it wanted to gather more information before making another decision to change rates.

Warsh acknowledged that inflation remained too high, but noted that there were other signs - such as tightening credit conditions - that the economy was moving in the right direction.

There is plenty more economic data to come between now and the committee's next meeting, the Fed chair added, which should paint a more detailed picture of the state of the economy.

While last month the committee signalled there could be one more rate rise this year, Warsh would not be drawn out on where he thinks they will go in six weeks' time.

The decision to hold rates steady was not unanimous.

While 10 of the 12 committee members voted to keep rates unchanged, Governor Lisa Cook and Cleveland Fed President Beth Hammack voted to increase rates to 4%-4.25%, from its current 3.75%-4%.

The Fed uses interest rate changes to try to keep inflation – the rate at which prices change – at 2% a year and keep the job market stable.

This tends to mean higher rates from banks and other lenders, which in turn affects spending and saving decisions.

For example, someone refinancing their mortgage or buying a property for the first time could face higher mortgage rates. It could also mean higher interest rates on credit cards or car loans. However, it means higher interest rates on savings as well.

This encourages people and businesses to save more, spend less money, and make less investments. It also encourages companies to hire less people or slow the pace of pay rises.

When inflation is low or if the Fed believes the economy needs a boost, it cut rates.

The idea is that this will have the opposite affect, with banks dropping rates leading to more spending and less saving from people and businesses.

Leaving the rates unchanged means rates on things like new mortgages or business loans are also less likely to change. It also means interest rates on cash savings are unlikely to rise.