In the year since the Federal Reserve brought interest rates to a more than two-decade high, the central bank has succeeded in taking the steam off of an overheated US economy. But higher borrowing costs have also had some unexpected effects.

Higher-income households are reaping the benefits of a booming stock market and rising home values. Corporations are borrowing at a fast clip, and consumers continue to spend.

But in other ways, a year of high interest rates is finally beginning to take a toll. Americans are searching longer for jobs, and the unemployment rate has inched higher. Small businesses are feeling the pain from costlier loans. And lower-income households are falling behind on payments for their car loans and credit cards.

"Things have softened in the last couple months, and Fed officials are going to be pretty concerned if they start softening more rapidly," said Veronica Clark, an economist at Citigroup Inc, adding that would lead officials to cut rates more rapidly.

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