“And I think the language indicates they’re going to cut further.”

MacIntosh said he believes the Fed may cut rates as low as 2.0 percent to help avert a recession, but not go as far as the 1.0 percent funds rate that some say precipitated the housing bubble.

“I think they’re trying to keep us out of a recession,” he said. “Whether this is enough or soon enough or too late remains to be seen.”

Brian Bethune at Global Insight said the Fed wants to guard against negative sentiment taking hold as Congress debates an economic stimulus package aimed at boosting consumer and business spending.

“The Fed needs to throw out a life raft to the economy pending the fiscal stimulus measures that are expected to move through Congress in the next week or so,” Bethune said.

“The earliest that consumers can expect to get relief from the package is June.”

Some analysts say the Fed will be reluctant to cut further for fear of reigniting inflation but may be forced into more cuts if the economy deteriorates further. The latest cut “can be seen as a second installment in the rapid and significant adjustment in the degree of monetary accommodation that began last Tuesday,” said Peter Kretzmer, senior economist at Bank of America.

“We believe that the size of the easing was likely ‘one-time’ in nature, and expect the FOMC to be more judicious in the months ahead. At this time, we believe modest additional easing likely will take place, depending on the evolution of the economic releases.”

Brusca said the Fed may have to move quickly to lift rates if the economy steadies.

“Ironically, the more successful the Fed is in stabilizing the economy the more of an inflation problem it will have and the sooner it will have it,” he said.

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