Federal Reserve Chairman Ben Bernanke, in a signal he is open to cutting interest rates, said the latest bout of turbulence in financial markets may put more strain on the economy.

Financial markets are once more abuzz with talk that US interest rates might be lowered again as Wall Street rebounded after a disappointing spell.

As consumer confidence slipped in France, one of Europe's largest economies, euro fell against dollar Thursday.

In what could be an election campaign blow to the Howard Government, the Reserve Bank board is today widely tipped to raise official interest rates.

US Federal Reserve policy-makers began meeting against the backdrop of a still-plummeting US housing market that is sapping consumer optimism and may require more interest-rate tonic.

This week's big political and economic focus will be inflation and whether official data out on Wednesday will trigger an interest rate rise in the middle of the election campaign. All eyes will be on the Consumer Price Index (CPI) for the September quarter.

Federal Reserve policymakers at their September meeting felt compelled to act aggressively in lowering a key interest rate for the first time in over four years.

The Housing Industry Association says interest rate rises are impacting real estate sales in Victoria. Figures for August show sales of new homes and units fell more than 19 percent to a 10-month low.

The US Federal Reserve's interest rate cut of half a percentage point have delivered the best that financial markets could have hoped for. The first easing in US monetary policy for four years has come in response to the credit market crisis as the federal funds rate lowers to 4.75 per cent.

Fed Meeting: The result - Federal Reserve Meeting Lowers Interest Rate to 4.75 pct.

Investors can call it what they like - their Super Bowl, their Election Day, their Day of Reckoning - but they might want to keep in mind that Tuesday's decision may end up raising as many questions as it answers. Will Federal Reserve lower the interest rates?

In order to stabilize the markets U.S. Federal Reserve unexpectedly cut the discount rates by half a percent sending stocks to rally in early trading.