The US Federal Reserve has cut interest rates to 3.5%. A day after global markets sank due to worries of a possible U.S. recession, the Federal Reserve Bank decided to reduce the risk of further economic problems by a three-quarter point cut interest rate before U.S. markets opened.

 

The Fed's interest move came as a complete surprise. It was the first time since the days following the terrorist attacks of September 11, 2001 that the committee had called an emergency meeting. Stocks rebounded with most European indexes closing higher, while Wall Street regained some ground. Dow Jones Industrial Average fell more than 400 points at the start of trading.

 

 What if, after the Bernanke bounce, stock markets continue to fall?