Businesses can borrow more cheaply to invest in growth.
💸 2. Consumer Spending Increases
Since borrowing is cheaper and savings earn less interest, people are more likely to spend money rather than save it.
This can boost demand for goods and services, helping to stimulate economic activity.
🏦 3. Savings Yield Less
Savings accounts, CDs, and bonds typically offer lower returns.
This can push investors to move money into riskier assets like stocks or real estate in search of higher returns.
📈 4. Stock Market Often Rallies
Lower rates can mean higher corporate profits (due to cheaper debt) and increased consumer spending.
Investors may shift funds from bonds into stocks, driving up equity prices.
💵 5. The U.S. Dollar May Weaken
Lower interest rates can make the dollar less attractive to foreign investors, potentially weakening the currency.
This can help U.S. exporters (as their goods become cheaper abroad) but may also increase the cost of imports.
🧩 6. Inflation Could Rise
More spending and borrowing can increase demand, which may push prices up, leading to higher inflation—especially if supply can’t keep up.
🏚️ 7. Real Estate Activity Tends to Pick Up
Lower mortgage rates can boost homebuying, refinancing, and construction, which helps stimulate related industries.
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