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When people say โThe Fed will cut ratesโ theyโre talking about the USA Federal Reserve lowering interest rates. Interest rates decide how much it costs to borrow money from banks.
If the Fed cuts rates, loans for things like houses, cars or businesses become cheaper.
This often encourages people and companies to borrow and spend more, which can help the economy grow.
On the other hand, lower rates usually mean savings accounts earn less interest, so savers get smaller returns. It can also make the USA dollar weaker, which affects global trade and investments.
In short, a Fed rate cut is meant to boost the economy, but it can also lead to inflation if money flows too freely.