The US central bank cut the interest it pays banks to hold cash by a quarter point

The US central bank has lowered the interest rate it pays banks for money they keep at the central bank. This means banks now earn less by simply holding cash in reserve.

The US central bank uses this interest rate to manage how much money banks lend to each other overnight. When the central bank lowers this rate, it makes it cheaper for banks to borrow from each other, which can encourage more lending in the broader economy. This is a direct lever the central bank pulls to influence short-term interest rates and overall economic activity.