While rate cuts by the Fed typically lower borrowing costs, experts say increased affordability in mortgages could lead to a higher demand for homes that would drive up home prices.

Federal Reserve Chair Jerome Powell on Monday said the U.S. economy is in "solid shape" and that more interest rate cuts can continue if the economy continues to evolve as expected.

Why it matters: For now it looks likely that the U.S. economy could avoid a recession as inflation plunges and the labor market remains healthy. Powell signaled that lower rates could help guarantee a so-called "soft landing," but cautioned that some risks remain.