Impact of US Interest Rate Cuts on Inflation

The US Federal Reserve's recent decision to cut interest rates marks a significant shift in its approach to managing inflation and unemployment. Following a period of aggressive rate hikes aimed at controlling the highest inflation in decades, this change was prompted by a rise in unemployment, which mirrored a crucial economic indicator. The Fed's intent behind lowering rates is to stimulate borrowing and consumer spending, ultimately working towards maintaining its inflation target of 2%. This delicate balancing act illustrates the challenges central banks face in navigating economic stability while managing the potential risks of renewed inflation.