Investors widely expect the Fed to cut interest rates at a meeting on Wednesday.
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In 2021, the Fed began aggressively raising interest rates in an effort to bring inflation under control. The policy has largely succeeded. Inflation has slowed dramatically from a peak of about 9% in 2022, though it remains slightly higher than the Fed's target of 2%. In theory, lower interest rates help stimulate economic activity and boost employment; higher interest rates slow economic performance and ease inflation.
"There is that much uncertainty because it seems not all Fed officials are of the same opinion," Gregory Daco, chief economist at accounting firm EY, told ABC News. "This is a sign of a trend that's going to start, but it's going to take a lot longer and be milder than an immediate transition," Fedyk said.Typically, lower interest rates make borrowing less expensive for businesses and consumers, propelling companies to invest in new projects and everyday people to stretch for bigger purchases. That all should help propel economic growth and buoy consumer optimism.
The most recent Democratic presidential candidate who failed to win reelection, Jimmy Carter, lost his bid amid a historic series of rate hikes at the Fed.
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