INSTANT VIEW: Fed cuts fed funds rate 25 points to 4.5 percent

NEW YORK (Reuters) - The Federal Reserve cut the benchmark federal funds rate by a quarter-percentage point to 4.5 percent on Wednesday to buffer the economy against a housing downturn and tighter credit conditions.

The decision by the central bank's Federal Open Market Committee was widely expected by financial markets.

COMMENTS:

BOB WALTERS, CHIEF ECONOMIST, QUICKEN LOANS, LIVORNIA,

MICHIGAN:

"The markets were not spooked by this Halloween announcement. The cut was not a surprise, as evidenced by the fact that long-term interest rates are not much changed from where they were before the announcement.

"The statement focused on the housing correction. That and inflation are two risks they are trying to address. They note some improvement on the core inflation numbers, but said they were watching rising commodity prices. They didn't cut a half point because they don't want to spur price increases, but they also want to make sure that credit markets continue to function well. The Fed is walking a tightrope and will take a wait and see attitude on future rate moves."

JOSEPH TREVISANI, CHIEF MARKET ANALYST, FX SOLUTIONS, SADDLE

RIVER, NEW JERSEY:

"The big surprise today is still the GDP report, because 3.9 percent growth was way beyond expectations, and two-thirds of that number comes from after the credit problems surfaced in August. It seems the economy won't be performing as poorly as people expected, and euro-dollar will probably remain in the 1.44-1.4550 range. The Fed's move was expected, and speculation now turns to what the Fed will do next. I think they're probably done. Also, I think the ECB may have to start cutting, and that could cause a dollar bounce."

ERIC WITTENAUER, ENERGY ANALYST AT A.G. EDWARDS IN ST.

LOUIS:

"It comes in as expected for the oil market. Obviously we ran up prices into the decision in a continuation of the rally earlier today. I think that had you seen no cut that would have likely been bearish for oil prices, while a larger-than-expected cut would have been supportive.

"In their decision they suggested that growth and inflation are in balance. I think there is one of the things you will continue to see is the Fed's willingness to cut rates in this environment, which could be inflationary. It would support real assets, not only oil but metals.

"The dollar has declined some after the decision and that is supportive of commodities as well."

DIANE DERCHER, CHIEF ECONOMIST, WADDELL & REED, OVERLAND