When the Fed lowers the policy interest rate (for example, by 0.25 percentage points), there are usually some benefits and impacts as follows:

1. For the overall economy

• Stimulating growth: Low interest rates make borrowing costs cheaper for businesses and individuals → easier to expand production, invest, and consume.

• Supporting the labor market: Businesses have the conditions to expand, creating more jobs.

• Promoting consumption: People find it easier to borrow to buy houses, cars, and consume goods and services.

2. For the financial market

• Benefiting securities: Low interest rates usually lead to capital flowing into stocks, as savings accounts yield less.

• Gold and Bitcoin may increase in price: As the USD weakens when interest rates are lowered, non-yielding assets (gold, crypto) become attractive.

• Bonds: Bond prices usually rise because the yields on old bonds are higher compared to the new interest rate.

3. For businesses & borrowers

• Businesses: Reduced borrowing costs, improved cash flow.

• Borrowers: Consumer credit, mortgages, home loans become cheaper.

• Savers: Worse off as bank interest rates decrease accordingly.

4. Impact on exchange rates

• Weaker USD: When interest rates are low, investors tend to pull money out of USD to seek yields elsewhere.

• Other currencies (EUR, JPY, VND…) may strengthen relatively.

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👉 In summary: The Fed's reduction of 0.25 points mostly benefits borrowers, businesses, securities, gold/crypto, but is unfavorable for savers in USD and may weaken the USD.

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