The first inter-meeting rate cut since Sept.17, 2001

The Federal Reserve cut short-term interest rates by three-quarters of a point this morning, the biggest inter-meeting rate cut since 1984. The respondents to the poll that went up in the right sidebar yesterday afternoon had it pretty much right, though the size of the cut has probably taken most by surprise.
The talk on CNBC right about now is "it better work". So far it's not.

Here's the policy statement:

The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Eric S. Rosengren; and Kevin M. Warsh. Voting against was William Poole, who did not believe that current conditions justified policy action before the regularly scheduled meeting next week. Absent and not voting was Frederic S. Mishkin.

Sounds like Ben Bernanspan's on-the-job education is progressing nicely.