(NewsNation) — Americans have been hit hard by high borrowing costs in recent years, but inflation has started to cool off, leading the Federal Reserve to lower interest rates for the first time in four years in September and possibly a second time in November.

A new U.S. Department of Commerce report shows inflation dropped from 2.3% in August to 2.1% in September. The Federal Reserve’s target inflation rate is 2%.

The Fed rapidly increased interest rates beginning in March 2022 when there was a red-hot labor market and high inflation.

By increasing the cost of borrowing, the Fed hoped to slow economic activity enough to curb rising prices but not so much that it tipped the economy into a recession. This objective became known as the “soft landing.”

So far, the U.S. economy has avoided a recession while easing inflation.

Another indicator of how well the economy is doing is the monthly jobs report from the U.S. Bureau of Labor.

A disappointing July jobs report reignited fears that a downturn was coming, but the September jobs report exceeded forecasters’ expectations. The October jobs report is the last view Americans will have of the state of the U.S. economy before the presidential election.

Here’s what to know about the Fed’s rate cut decision and what it means for you.

What is a rate cut?

From March 2022 to July 2023, the Fed raised its key interest rate 11 times to its current level of roughly 5.3%, a 23-year high. Those rate hikes have helped cool inflation but also helped push the unemployment rate to 4.3%, the highest level since October 2021.

Just like raising rates slows economic growth, the Fed can lower rates to stimulate the economy. However, policymakers have been reluctant to do so since inflation remains above the Fed’s 2% target rate.

When could a rate cut happen?

The Federal Reserve will meet Nov. 6-7 when it will likely make cuts.

“I expect we will get a 25-basis-point cut at each of the next two meetings,” said Thomas Simons, senior economist at Jefferies, to Reuters.

But Simons said, “the information we gather suggests the economy overall is not in desperate need of easing.”

What would a rate cut mean for families?

Lower interest rates could provide relief to consumers in the form of better mortgage rates and cheaper car loans, but it will depend on how much borrowing costs get slashed.

Future rate cuts may provide a sugar high to the U.S. economy and could lead to lower mortgage rates, though they have already started to come down in anticipation of future rate cuts.

The Associated Press contributed to this report.