Can another rate cut help the US economy?

The Federal Reserve sits down today to talk about potential for cutting interest rates again. Some believe that rate cut will drop below inflation numbers and help worldwide economic concerns lessen.

It has been a week since the United State's Federal Reserve cut interest rates by 0.75 per cent, but it sits down today for its next session in which it will make key decisions about interest rate cuts or if they will hold them steady.

Some economists believe that the Fed will do nothing, since its rate drop was so drastic and surprising just last week. Others are expecting a significant drop, up to half a percentage point, that would help lift the country's economy, and therefore many world economies out of a looming recession.

Some believe the Fed will drop the interest rate below the pace of inflation here. This would, according to some economists, help the country to avoid the first simultaneous decline in both income and household wealth (the last time this happened, it was 1974.)

Many things are likely to spur this type of rate cut here including falling home values and a weakening labour market here.

The weakening US economy has had ripple effects around the globe, with Japan likely to enter into recession, and the UK and Australia headed for increased worries, many believe that the US Fed may help avert a drastic and deep recession with these additional cuts.