The impact of a rate cut: 1. If the Fed lowers, savers will receive less interest, so they will invest their savings in other investments to cover the benefits they would otherwise enjoy.
The number of borrowers increases, the amount increases.
This is to boost economic growth and domestic demand.
2, favorable to gold, gold and pegged, the dollar rate cut and favorable to gold, gold’s safe-haven value will be reduced.
3. The cost of using the dollar will be lower after the Fed cuts rates.
As an international community, the dollar can be traded and exchanged freely by investors.
As a result, more dollars will be converted into other or goods and sold without lowering interest rates, leading to the possibility of a dollar devaluation.
4. The Fed’s interest rate cut leads to a decrease in purchasing power, a relative increase in the price of imported goods, a decrease in the ability of the United States to import, and a decrease in the price of American goods denominated in dollars relative to other countries’ currencies, increasing their competitiveness, which is good for exports.
