(NewsNation) — Americans have been hit hard by high borrowing costs in recent years, but with the Fed weighing a potential interest rate cut, some relief could come as soon as September.

Starting in March 2022, the Federal Reserve began rapidly raising interest rates to crush inflation and cool a red-hot labor market.

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 — but a disappointing July jobs report has reignited fears that a downturn is coming.

Now, the Fed is facing pressure to slash interest rates, with lawmakers like Massachusetts Senator Elizabeth Warren warning that any delay risks “driving the economy into a ditch.”

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.

Last week, the Fed decided to keep its benchmark interest rate unchanged despite calls from some economists to implement a cut.

“We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate,” Federal Reserve Chair Jerome Powell said, “but we’re not quite at that point.”

When could a rate cut happen?

Powell said that if inflation continues to fall, then a rate cut “could be on the table” when the Fed next meets Sept. 17-18. But those comments were made before turmoil swept through global financial markets on the back of July’s underwhelming jobs report.

It’s possible the Fed could call an emergency meeting and cut rates before September, but that’s unlikely.

“There’s nothing in the Fed’s mandate that’s about making sure the stock market is comfortable,” Austan Goolsbee, president of the Federal Reserve Bank of Chicago, told the New York Times on Monday afternoon.

The Fed only calls unscheduled meetings in extreme situations, and the last time it did so was at the start of the coronavirus pandemic on March 15, 2020, the Times reported.

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 how much borrowing costs get slashed.

According to the CME FedWatch tool, the Fed is expected to make a 50 basis point cut in September and multiple cuts before the end of the year. If that happens, the Fed’s key interest rate could be a full percentage point lower than it is now, dropping to around 4.3%.

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.

“While the potential rate cut in September will be a good start to bring the rate down, subsequent drops in mortgage rates may not be as significant as many anticipated because the market is already pricing in rate cuts and such expectation is reflected by recent rate drops,” Jiayi Xu, an economist at Realtor.com, recently told the Associated Press.

The Associated Press contributed to this report.