Rob Blackin - BlogTalkRadio  

Wall Street's focus will be the central bank when it issues its decision on rates and its accompanying economic statement at 2:15 p.m. EDT. The slumping housing market, tightening credit market and volatile stocks have given investors reason to believe that monetary policy is in need of some loosening.

Most in the market expect either a quarter-point cut in the benchmark federal funds rate or a half-point cut, given last month's decline in jobs and weakening retail sales. Equally important is how the Fed characterizes the housing, credit and stock markets' drag on the U.S. economy, and if it suggests there are more rate reductions to come.

The Labor Department's August producer price index was also more favorable than the market predicted. Wholesale prices fell 1.4 percent last month, the biggest decline in 10 months and led by a 6.6 percent drop in energy costs. Core inflation, which eliminates volatile food and energy prices, rose by a mild 0.2 percent, as expected.