What happens when the Federal Reserve lowers interest rates?

When the Federal Reserve lowers interest rates, it stimulates economic growth. Lower interest rates make borrowing cheaper for consumers and businesses, encouraging them to take loans for various purposes such as buying homes, cars, or investing in business expansions. This increase in borrowing leads to more spending in the economy, which can boost consumption and investment. When people spend more, businesses experience higher demand for their products and services, potentially leading to increased production, hiring, and further economic activity.

In a broader economic context, lower interest rates can help to alleviate sluggish economic conditions by making it easier for individuals and businesses to finance purchases and investments, thereby fostering an environment of growth and development.