Federal Reserve chairman Mr Alan Greenspan appears prepared to push a key interest rate to its lowest level in nearly four decades to try and stabilise the US economy.
The US economy went from bad to worse after the September 11th attacks, and additional credit easing by the Fed is sorely needed to persuade consumers to spend and businesses to invest, economists said.
"The picture has dimmed substantially since the attack," said Mr David Wyss, chief economist at Standard & Poor's in New York. "It is hard to see how they can make a mistake by loosening at this point".
Following the attacks, consumer confidence has plunged by the largest amount since the Gulf War, billions of dollars worth of business have been lost and layoffs have rocketed to a nine-year high.
Fed policy-makers have already cut interest rates eight times this year, with the most recent cut of a half-point coming on September 17th, the morning the stock markets reopened after a four-day shutdown.
That pushed the Fed's target for the federal funds rate, the interest that banks charge each other on overnight loans, to 3 per cent, the lowest level in nine years.
Even if the country suffers a recession, most analysts are looking for a rebound at least by the second half of next year, fueled by the Fed rate cuts, tax reductions and increased government spending.
The Bush administration is preparing a new economic stimulus package that will include extra spending and tax relief for individuals and businesses.