On September 18th, 2024, the Federal Reserve announced a 0.5% reduction in benchmark rates, marking its first cut since April 2020. This study aims to investigate the rationale behind this monetary policy decision and evaluate its impacts on the U.S. economy, particularly in the context of an ongoing recession. By examining both domestic and global economic factors, the research identifies decelerating growth and mounting inflationary pressures as key drivers of this policy shift. The methodology integrates a literature review, historical event analysis, and comparisons of policy adjustments over time. The findings reveal that the Federal Reserves rate cut has a dual effect: on the one hand, it may stimulate investment and consumption to some extent while also helping stabilize financial markets; on the other hand, it poses challenges such as increased inflation and limited room for additional interest rate reductions. Furthermore, these domestic effects also create ripple effects on the global economy, potentially amplifying international economic volatility. Based on the analysis, it can be concluded that while the Federal Reserve's interest rate cut demonstrates short-term benefits in addressing current economic challenges, it also introduces uncertainties that may lead to unintended consequences, both domestically and globally.
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