The Fed lowers interest rates in order to stimulate economic growth. Lower financing costs can encourage borrowing and investing. However, when rates are too low, they can spur excessive growth and perhaps inflation. ... Rate increases are used to slow inflation and return growth to more sustainable levels.

What does Fed rate cut mean?

One of the Fed's goals with a rate cut is to make borrowing less costly. Translation: You could see lower interest rates on credit. Economist and podcast host John Norris says that a Fed rate cut could actually be helpful to the average consumer.

Why did the Fed cut?

Fed Cuts Interest Rates To Near Zero, Citing Coronavirus Economic Impact : NPR. Fed Cuts Interest Rates To Near Zero, Citing Coronavirus Economic Impact The Federal Reserve cut its key interest rate to near zero — a dramatic move not seen since the depths of the 2008 financial crisis.