The Federal Reserve announced a little while ago that it was cutting its overnight interest rate by a half of a percentage point — the first cut in that rate in more than four years. The rate is now at 4.75%.

The result on Wall Street was dramatic.

At last look, the Dow Industrials were up about 326 points.

The Fed also cut what is called the discount rate by half a percentage point — down to 5.25%.

Put it all together and you have the reason why the Dow Jones Industrials were up about 326 points the last time I looked. These moves by the Fed were broader than what most folks had anticipated.

Of course these moves are nice for some people, but the bigger picture here is that the Fed must feel that the threat of recession is bigger than that of inflation.

We’ll see how the rate happy hangover affects the Street tomorrow.

Next up? Oil prices.

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