It seems highly likely that the US Federal Reserve will cut interest rates in half today to 0.5%.

As base rates approach zero the Fed is rapidly running out of conventional measures to stimulate the economy. Therefore expect to see some forms of quantitative easing and large fiscal stimuli throughout 2009.

For more information on quantitative easing

Managing the US economy is going to be extremely difficult over the coming six months. Without a well functioning financial system, few of the conventional measures are helping to get the economy going again.

The Fed and the US Treasury will have to work together first and foremost in getting to the route of the US economic downturn. Whether this be housing, the banking and financial system, consumer confidence etc etc. Large scale, throw your money at it type solutions are not going to work well...they will be costly and wasteful.

If the broken system can be fixed and the economy taught to stand on its own two feet, then the seeds will be sewn for economic recovery.

Its going to be a long, hard and complicated journey.