The Federal Reserve System's primary objectives are to promote full employment, stability in prices, and growth in the economy. If, in pursuit of these objectives, the Federal Reserve lowers the federal funds rate:

It is seeking to inject liquidity into the banking system

It is seeking to drain liquidity from the banking system

It is seeking to reduce irrational exuberance in the stock market

It is encouraging banking institutions to curb their lending

It is signaling that the unemployment rate will likely increase.