fed rate cut

Question

I know they meet tomorrow and people are freaking out. Someone I know said it could be a catastrophic economic disaster based on their decisions. My question is…..what? I don’t get any of it at all. I’ve read articles and am trying to understand. What is a fed rate cut? How is that bad? What would it do? How would it cause an economic disaster? How would a rate cut lead to a recession?

Clearly, math and economics are not my strong suits and I want to be as informed as possible.

Thanks!

In: Economics

Answer 1

A Fed rate cut lowers interest rates, making borrowing cheaper but potentially leading to excessive spending and inflation if not managed carefully.