Fed's Quarter-Point Cut May Not Be the Last

One and done? Don't bet on it.

The Federal Reserve met expectations on Wall Street during Wednesday's trading session by cutting its closely-watched target for short-term interest rates by a quarter point, bringing its federal funds rate target to 2%.The Fed also cut the discount rate by a quarter point to 2.25%.

The move, made at the end of the regularly scheduled, two-day meeting of the rate-setting Federal Open Markets Committee, reflects continued concerns about economic growth amid a slowdown in the U.S. housing market and a persistent credit crisis on Wall Street. It also sparked a debate over whether the Fed will pause in its monetary easing cycle after this move amid rising signs of inflation.

The language in the Fed's policy statement accompanying its decision appeared to be deliberately ambiguous to give the central bank leeway to either cut, stand pat or even raise rates at its next meeting. The move could be intended to allow the central bank to act on economic developments without spurring market expectations in any one direction.

"They left the door open to take a little breather here because there's naturally a lag in the economy before Fed activity takes effect," says Len Blum, managing director with Westwood Capital. "[Fed Chairman] Ben Bernanke wants to gauge the effects of the dramatic actions he's taken over the last few months. Still, this is a weak economy, housing prices still have a long way to go and the consumer is getting pinched at every possible angle, so I expect we'll see more rate cuts."