Updated from 1:18 p.m. EST

The plunge in consumer confidence to a nine-year low in October puts pressure on the

Federal Reserve

to cut interest rates as early as next week, some economists say.

The confidence index fell to 79.4 in October from 93.7 in September, its worst monthly drop since the Sept. 11 attacks, the Conference Board said. It now stands at its lowest level since November 1993.

"An unraveling of consumer confidence greatly increases the odds that the Fed will move next week," said Anthony Karydakis, an economist at Bank One, who is forecasting a 50 basis-point cut.

Fed fund futures, a good proxy of monetary policy, are now placing an 85% chance of a 25 basis-point reduction at the central bank's Nov. 6 meeting. That's up from 60% before the data was released. At 1.75%, interest rates are now at their lowest level in more than 40 years.

In the past few days, several newspaper stories have speculated an interest rate-cut is imminent. Some observers think the absence of reported dissent in those stories is an indication the Central Bank is comfortable with the idea. "It is a tacit endorsement of the market's view," said Tony Crescenzi, bond market strategist at Miller Tabak and

RealMoney.com

contributor, who is predicting a 25 basis-point cut next Wednesday.

Tuesday's confidence report comes on top of recent evidence of a weak economy, including a 5.9% drop in durable goods orders in September and a sharp decline in the University of Michigan's sentiment index.It follows several layoff announcements from the corporate sector and no pickup in investment spending.

"A weak labor market, the threat of military action in Iraq, and a prolonged decline in financial markets have clearly dampened both consumers' confidence and their expectations for the near future," said Lynn Franco, director of research at the Conference Board, in a statement.

Within the survey, the present situation index, a gauge of current attitudes, fell to 77.5 in October from 88.5 in September. Meanwhile, the expectations index, which measures a six-month outlook for the economy, declined to 80.7 in October from 97.2 in the previous month.

"Unless there is strength revealed in economic reports later this week, the Fed is headed for a cut next week," said Karydakis. "They have to show some response to a rapidly deteriorating environment."

The key event this week will be Friday's release of the jobs report, expected to show modest improvement in payroll activity. Unemployment is forecast to tick up to 5.8% from 5.6%, however.

Job losses have been plentiful in October, with

EDS

(EDS)

,

Sun Microsystems

(SUNW) - Get Report

,

J.P. Morgan Chase

(JPM) - Get Report

, and

Lucent Technologies

(LU)

among the latest to cut back their workforces.

"More people are unemployed or worried about losing their jobs," said Kevin Logan, an economist at Dresdner Kleinwort Wasserstein, who thinks the Fed could ease next week. "This suggests the consumer is going to retrench and that the outlook for growth is not going to be as rosy as it had been."

Ahead the holiday season, discount retailers and department stores, including

Wal-Mart

(WMT) - Get Report

,

Target

(TGT) - Get Report

,

Federated

, and

Talbots

(TLB)

have had weak sales numbers.

"The outlook for the holiday retail season is now fairly bleak," said Franco. "Without the likelihood of a pickup in consumer spending, an already weak economic recovery could weaken further."