As expected, the U.S. Federal Reserve Board cut interest rates again today. The Fed lowered rates by 50 basis points to 2.5%.

The cuts seemed a certainty today, although there was some dispute as to whether the Fed would go 25 bps or 50 bps. The Fed has cut rates at every opportunity this year, and has added three inter-meeting cuts to the mix, most recently after the September 11 terrorist attacks.

Along with lowering its target for the federal funds rate by 50 bps, the Fed’s Board of Governors approved a 50 bps reduction in the discount rate to 2%.

The Federal Open Market Committee said in its policy statement, “The terrorist attacks have significantly heightened uncertainty in an economy that was already weak. Business and household spending as a consequence are being further damped. Nonetheless, the long-term prospects for productivity growth and the economy remain favorable and should become evident once the unusual forces restraining demand abate.”

Opinion remains split as to whether the Fed has further cuts up is sleeve. The Fed, however, seems to indicate that it is open to still additional cuts.

“The Committee continues to believe that, against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future.”