The Federal Reserve slashed the Federal discount rate by three quarters of a point last Tuesday. This is the largest single rate cut in 23 years. The last time there was a rate cut of at least three-quarters of a point was in October 1984.

The move comes amid the massive stock market sell-off in the foreign stock exchanges particularly in Asia in the last two days. The movement in the market particularly in Asia experienced sharp declines caused by the worries that a US recession would affect the rest of the world. Asian markets were down by as much as 9% while those in Europe were near just positive during the close.

Fed policy-makers are scheduled to meet on January 29-30 and, in the wake of the central bank's bold rate cut on Tuesday, financial markets were expecting the Fed to again lower borrowing costs by at least a quarter of a point.