Fed may cut rate to save economy

The Federal Reserve may lower its benchmark interest rate to 1 percent and signal further reductions to levels unseen since Dwight Eisenhower was president.

Tumbling commodities prices and weaker consumer spending are slowing inflation, which officials described as a "significant concern" at their last scheduled meeting in September. Today, the Commerce Department will probably report that the economy shrank at a 0.5 percent annual rate in the third quarter, the most since the 2001 recession, economists predict.

The Fed "will be very aggressive," said Mark Gertler, a New York University economist and research co-author with Fed Chairman Ben S. Bernanke. "Inflation risks are off the table" and "the issue now is how bad the recession will be."