The Federal Reserve cut down its benchmark interest rates by 75 basic points, from 4.25% to 3.5%, for the first time in the last 7 years, also marking the most significant one-day move in the recent period. The unusual move comes at a time when rumors on a possible recession of the United States start to settle in.

The decision was taken Tuesday morning, when the Federal Open Market Committee made the official announcement: “The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth.” And the central bank will not stop here: “The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.”

Fed officials took the decision during an emergency phone conference on Monday, after a continuous sell-off of stocks all around the world, as concerns of an economic breakdown appeared. The Nikkei stock average in Japan closed down 5.7%, the biggest drop in the last 10 years. Hang Seng index in Hong Kong also came to the biggest loss since the 2001 terrorist attacks, dropping 8.7%.

United States representatives need to take action, as Treasury Secretary Henry Paulson said during a meeting at the United States Chamber of Commerce on Tuesday. The domestic economy needs to be stimulated as economic instability concerns grow. “Time is of the essence and the president stands ready to work on a bipartisan basis to enact economic growth legislation as soon as possible,” Paulson said.

"I personally think that the economy has a lot of issues right now with respect to housing, the availability of credit and a slowdown in order rates for different types of business equipment,” said John Carey, portfolio manager for Pioneer Fund, according to Reuters. This might help a little bit in the near-term, but basically I think we're on the downside of an economic cycle and while this type of move could help, we still have some basic issues to resolve before we can begin a full-fledged recovery. I think it will be some time before the economy starts to turn around.”