Fed focuses on Wall Street woe

WALL Street's weakness will be a primary concern for US Federal Reserve policymakers as they begin a two-day review of the American economy in Washington today, but policy is expected to remain unchanged.

Economists say the Fed is not likely to cut the Fed funds rate from the current 40-year low of 1.75% despite Wall Street's drag.

Fed chairman Alan Greenspan has previously avoided any attempt to influence market levels directly and a move now would signal a key shift in policy. The Fed will be worried, however, by the falling market's effect on US consumers as retail investors. More than a third of Americans hold assets tied to the stock market. Some manufacturing indicators are improving, although the US economy remains in danger of a double-dip recession.

'If the Fed did anything other than keep monetary policy unchanged, financial markets would fall over in a collective faint,î said David Berson, chief economist for mortgage bond dealer Fannie Mae. 'If we could just get the stock market to turn around, America would be looking pretty good.'