From the FED:

The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3-1/2 percent.

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.

In a related action, the Board of Governors approved a 75-basis-point decrease in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Chicago and Minneapolis.

Despite this effort, the FED only reduced the rates to the 10 Year Note and still have a distance to go, however, it is a positive step. Wall Street is finally realizing as we predicted, a depression is looming on a global basis.

It is expected that the FED will continue lowering rates in its meeting in February. Whether they lower again by .25 or the expected .50 is up for debate, however, at this stage, the FED cannot do too much.

We predict that some Wall Street analysts will complain that the rate should have been dropped by a full basis point or more to prevent a major sell off. We also predict that the markets will still see a major sell off, however, we believe this will, in the long-run, be a market correction, reflecting the actual economic conditions.

Stay tuned….