Fed Pivot

A Fed Pivot is when the Federal Reserve (the U.S. central bank) shifts its interest rate strategy, usually from raising rates to cutting them, or vice versa. You'll hear this term constantly in financial news because it directly affects stock prices—lower rates generally make stocks more attractive, while higher rates can pressure them. The Fed raises rates to fight inflation (when prices rise too fast) and cuts them to stimulate the economy during slowdowns. For example, if the Fed has been hiking rates all year but then signals it might start cutting next quarter, investors might say "the Fed is pivoting," and stock markets often rally on that news. It matters because it shapes how much money flows into stocks versus safer investments like bonds.