Television reporters — their crystal balls in tow — were talking about it like it was a done deal before it was even announced. Analysts were beyond whether it was going to happen. They were guessing just how much it was going to be cut. And in the end they were all, to a certain extent, correct.

The Federal Open Market Committee did finally cave in to pressure from peers, industry analysts, and even the public at large and slashed the federal funds rate 50 basis points Tuesday to 4.75 percent in hopes of curtailing the housing crisis befalling this country, while still keeping a careful eye on inflationary concerns.

In a simultaneous move Tuesday, the Fed’s Board of Governors also reduced its discount rate (the rate charged by banks to each other to borrow funds overnight) by 50 basis points to 5.25 percent. This is the second reduction in the rate in as many months.

The impact, and reaction, to the cut in the Fed’s short term rate that dictates the interest consumers pay on myriad types of personal and business loans, was immediate and strong — whether for or against it. Wall Street was ecstatic, ending the trading day both Tuesday and Wednesday up markedly. So were lending institutions like Bank of America, which immediately lowered its prime rate.

Some analysts weren’t so sure it was the right thing to do at the moment. One Yale University economist even testified before a congressional committee Wednesday that a drop in consumer confidence could result in a recession within the next year’s time.

In a statement released Tuesday, the FOMC justified making the move (the first rate decrease in years after 17 consecutive upward rate “adjustments” under Alan Greenspan’s leadership, followed by more than a year of a wait and see stance with Fed Chairman Ben Bernanke at the helm).

“Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally,” said the FOMC statement. “Developments in financial markets since the Committee’s last regular meeting have increased the uncertainty surrounding the economic outlook.”

Translation: the Fed’s not sure, but they have to do something. Lowering interest rates always has the potential of increasing inflation rather than controlling it, as we saw with home prices over the past six years. It will take years for the fallout from this latest move to be felt and measured. In the meantime, the Fed says it remains ready to act as needed to promote price stability and sustain the nation’s overall economic growth.

In a published report released Wednesday, RealtyTrac VP of Marketing Rick Sharga stated that the reduction of the federal funds rate may help moderate future foreclosure activity somewhat in two important ways: 1) some people who may have gone over the edge into foreclosure may be spared if the reduction means the rate on their adjustable rate mortgage isn’t reset as high as originally anticipated; and 2) money that has been held out of the credit pool by investors may find its way to Wall Street after all.

Overall, it is way too soon to tell whether this latest move by the Fed will help or hinder the nation’s economy and pull the housing market out of its slump. In the meantime, investors, prospective homebuyers and real estate professionals working the foreclosure market will still have an ample supply of inventory to work with.