But only by a quarter-point, to 4.25 percent, and that's bound to disappoint some on Wall Street who were hoping for a half-point cut (stocks are already tumbling). The central bank's policymakers, however, kept the door open to future cuts, which some economists believe is the only way to avert a recession. The Fed also cut the discount rate to 4.75 percent, from 5 percent, with the hope of encouraging bankers to keep up their lending to the consumers and businesses. From the NYT:

Today’s cut in the rate at which financial institutions lend money to each other for very short periods might not end that reluctance to lend, some economists say, and that could push a still-growing economy toward recession. Housing is by far the weakest sector. Home sales are down and prices have fallen not just on the East and West coasts, as they did in previous slumps, but in almost every region. Consumer spending has been less than robust in the opening weeks of the holiday shopping season, but well above the recession levels in the first two years of the decade. Corporate profits, which had held up well through most of the decade, are showing signs of retreat, and some economists say that capital spending on new machines and equipment might also be weakening. Job growth has clearly weakened in the last two years, but not drastically.