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by Frank James

If the economy is in a recession or soon to be in one, it will be hard to blame Federal Reserve Chair Ben Bernanke.

The Fed’s move this morning

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to cut the federal-funds rate, the rate banks charge each other for overnight loans, by three-quarters of a percentage point, to 3-1/2 percent, can only be described as a bold, aggressive move, especially since the Fed board has a regularly scheduled meeting next week and many analysts had expected something more like a half of a percentage point cut.

But a majority of the Fed’s board members, under Bernanke’s leadership, clearly thought they had to send a strong message to the world’s financial markets, which appear to be melting down, that they are on the case, that they will do everything they can to provide liquidity to the system.

In its statement, the Fed makes a point that is troubling which is, that despite after all its efforts so far, the credit crunch still has a vise grip on lending to both consumers and businesses.

As the Fed statement said:

For all those inflation hawks, including those on the Fed itself, the board said inflation wasn’t the biggest concern right now:

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

The Fed included this line, which may help explain why the U.S. financial markets took such a big hit this morning.

Appreciable downside risks to growth remain.

That’s the Fed sending, in its typically measured way, a real warning that it sees the recession wolf at the door.

If the White House and Congress ever needed a signal that they need to work quickly to get a stimulus package passed and cash into the hands of consumers, this was it.