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How the Fed Can Cut Rates This Summer Without Cutting Rates

·1 min

The Federal Reserve has multiple tools at its disposal to impact the economy. One of these tools is the ability to indirectly influence various interest rates across the economy. While the central bank controls short-term rates by setting a target range for the federal-funds rate, it can also sway other rates by communicating its future intentions. For instance, the Fed recently stated that policymakers expect to cut the rate range once this year, down from the previous expectation of three times. This communication alone can have a real impact on businesses and households.