For the second time in the space of three weeks, the US Federal Reserve has cut its benchmark interest rate by half a percentage point. The Fed’s target rate is now back at 1 per cent, where it hit bottom in 2003. As stress in the real economy intensifies, the Fed was right to use much of its remaining firepower.

Most indicators suggest that the US economy is already in recession. Consumer confidence plunged to a record low this week and official data released on Thursday are expected to show a decline in gross domestic product for the past three months.