With its quarter-percentage point cut Wednesday in the fed funds rate to 4.50% and the discount rate to 5.00%, the Fed appeared to tilt slightly against another interest rate cut in December.

In its statement, the Fed said "economic growth was solid in the third quarter" and that strains on financial markets had eased somewhat on balance. The Fed added that today's action "combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy."

Fed Analysis: The above suggests that Chairman Ben Bernanke and the Fed are laying the groundwork for an end to the Fed's brief easing of monetary policy, if in fact the U.S. economy grows at an acceptable rate or inflation accelerates. The economy has slowed through 2007, but on Tuesday Q3 GDP unexpectedly accelerated to 3.9%, the U.S. Commerce Department announced, up from 3.8% in Q2. It's quite likely Tuesday's Q3 GDP statistic influenced the Fed -- swiping away any notion of a half-percentage-point, or 50 basis point, reduction in short-term rates. Further, while monetary policy doves will argue that the sub-prime mortgage and sluggish housing sector headwinds remain, monetary policy hawks -- or those who believe the Fed does not need to cut rates further -- can argue that the Fed has two GDP data points, Q2 and Q3, which indicate that the U.S. economy is growing at a sufficient rate, and that the Fed can now keep interest rates where they are, absent new evidence of a slowing economy, in the quarters ahead.