#FedRateCutAffectsDollarTrend Inflationary Pressures and Dollar Weakness: When the Federal Reserve cuts interest rates, it can stimulate economic activity by making borrowing cheaper. However, this increased borrowing and spending can lead to inflationary pressures. As the U.S. economy grows and more money circulates, the value of the dollar can decrease due to inflation. A weaker dollar may increase the cost of imports, potentially driving up consumer prices, which is an additional challenge for the currency.