#FedRateCutAffectsDollarTrend Increased U.S. Consumer Spending: A Fed rate cut typically reduces borrowing costs for consumers, encouraging more spending on goods and services. While this can stimulate economic growth, the increased demand for products can contribute to inflationary pressures, which may weaken the dollar. The rise in inflation expectations could lead to a depreciation of the currency as the value of money decreases over time.