The Impact of the Federal Reserve's Interest Rate Adjustment on Financial Market

Recently, although inflation in the U.S. has cooled down, the Federal Reserve is expected to cut interest rates only once this year. Powell remains open to the timing of the interest rate cut, which makes the entire financial system pay close attention to the Federal Reserve's interest rate adjustment. This paper aims to explore the impact of the Federal Reserve's interest rate hikes and cuts on the financial market, especially its impact on the banking system and stock markets. This paper also identifies the Federal Reserves role in mediating the economy. It uses a combination of theoretical analysis and case analysis to explore the impact of the Fed's interest rate adjustments on the banking system and the stock market. After analysis, this paper found that the Federal Reserve has coordinated the financial system by using the monetary policy of raising and lowering interest rates and supervising banks, maintaining the health and stability of the economy.