in normal circumstances, the Federal Reserve implement monetary policy through its influence on short-term interest rates, which affect other interest rates and prices.
If the economy weakens, Fed rate cut capacity to support the economy hit by enticing businesses to invest more to generate new funds for the production and trading of goods, while encouraging households to spend more to buy a home, automotive, commodities and other services. For example, from 2001 to mid-2003, the Fed lowered interest rates 13 times, from 6.25% to 1% in order to combat the economic downturn.
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