Federal Reserve policy-makers are expected to stop short of lowering U.S. interest rates at a meeting on Tuesday but could signal readiness to cut them quickly if needed to protect the economy from one of the most serious financial crises in decades.
The Fed has held the interbank overnight interest rates steady at a low 2 percent since April to help the economy recover from a deep housing market decline and sharp lending pullback.
"The Fed appears more willing to address the current credit and economic difficulties through an expanded discount window and credit facilities rather than a cut in interest rates," said John Silvia, chief economist for Wachovia Economics Group in Charlotte, North Carolina.
The U.S. central bank will announce its decision on interest rates at around 2:15 p.m. EDT.
Policy-makers said at their most recent meeting in early August that the Fed would act as needed if economic and financial developments posed a threat to sustainable economic growth and stable prices.