In response to the global equities sell-off and the likely pressure on U.S. stock markets when they open later today, the U.S. Federal Reserve slashed the Fed Funds rate by 75 basis points to 3.5% Tuesday morning.

The Board of Governors also approved a 75-basis-point decrease in the discount rate to 4%. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Chicago and Minneapolis.

The Fed said:

The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.

While the release said that "Appreciable downside risks to growth remain," it also mentioned that the committee expects "inflation to moderate in coming quarters." No doubt, the Fed has made its choice for now, preferring to stimulate the economy despite risking higher inflation. With lower oil prices -- caused by fears of lower demand as the economy slows down -- the Fed may have less to worry about inflation.

Has this move been enough? So far, futures indicate it may have been -- at least for today -- as their losses aren't as steep as before the announcement. Even with this Fed cushion, I'd expect the session to be bumpy.