The Federal Open Market Committee (FOMC) decided today to lower its target for the federal funds rate by 0.50% to 1%.

They stated that “the pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.”

They also stated that inflation (food and fuel) has significantly declined and is no longer a significant threat to the overall economy.

I would suggest that equity markets would likely pause or decline slightly based on this news (some profit taking).  Conversely, I would suggest that the FOMC (Fed) would reduce interest rates down to zero if required.