#FedRateCutAffectsDollarTrend Increased Borrowing and Spending in the U.S.: A Fed rate cut lowers the cost of borrowing, encouraging U.S. consumers and businesses to take on more debt. While this boosts domestic economic activity, it can also lead to concerns about future inflation and the U.S. government’s ability to manage its debt. This may reduce investor confidence in the dollar, contributing to a decline in its value.