By David Schepp BBC News Online North America business reporter

US central bank governors convene in Washington on Wednesday to weigh a cut in interest rates for the first time in 11 months, hoping to revive a stalled economic recovery which dominated much of the campaigning ahead of the US mid-term election on Tuesday.

The Fed will cut rates and woe to them if they don't

Michael Holland, analyst

Most analysts expect the Federal Reserve to cut its Fed Funds rate, the interest banks charge one another for overnight loans, by 0.25%, while others are holding out for a half-percentage-point cut.

Brian Fabbri of BNP Paribas said that he was expecting a rate cut not only in November but also in December - and the prospect of a war against Iraq could lead the Fed to move even more aggressively to cut rates.

But with the key rate hovering at 41-year-old lows, economists question if lowering it any further would do anything to reinvigorate the flagging economy.

"This is all about confidence," says Michael Holland, chairman at Holland & Co.

He says a 25 basis points cut would not spur spending by business or even propel consumers to buy more goods.

"But the potential shoring-up of confidence that might be instilled by such a move would eventually work its way down eventually to those kinds of decisions," Mr Holland told BBC News Online.

"The Fed will cut rates, and woe to them if they don't."

Economic vitality

At the last meeting of the Fed's Open Market Committee in September, the rule-making body decided against a rate cut, saying its current economic policies would foster recovery.

Mr Greenspan has warned of economic weakness

The committee, headed by Fed chairman Alan Greenspan, nevertheless restated that the greatest risk to the economy lay in sluggish growth rather than rising inflation - leaving the way open for future rate cuts.

In the last 10 days, new data on weak consumer confidence and spending has given the Fed additional reasons to cut rates.

A weak employment report on Friday along with other data showed the economy continued to lose momentum in recent weeks.

Americans, questioning the vitality of the economy, have slowed spending after a three-year-long shopping spree.

Jobs question

In addition, the US jobs picture remains bleak, with two consecutive months of falls in the number of new jobs being advertised.

The real question is whether... the Fed will opt for a bigger cut

Ram Bhagavatula, economist

Employers cut 5,000 jobs from their payrolls last month and the unemployment rate moved up a tenth to 5.7%, according to US Department of Labor.

On Monday, outplacement-firm Challenger, Gray and Christmas reported job-cut announcements hit 176,000 in October, a whopping 150% increase over September.

October's level was the second highest this year. Only January saw more job-cut notices, according to the Challenger monthly employment report.

Countering weakness

Such negative economic readings are themselves reasons enough for the Fed to cut rates, virtually guaranteeing a 25-basis-points rate cut on Wednesday.

"The challenge for the Fed is no longer keeping inflation down but preventing self-feeding weakness from taking hold in the economy," says Ram Bhagavatula, chief economist at the Royal Bank of Scotland.

Mr Bush seeks further tax cuts to revive the economy

He says until the recent release of disappointing economic statistics, a resilient and strong housing market would have led the Fed to believe current monetary policy was sufficient.

But the rout on share values since April has changed consumers attitudes markedly.

This has been witnessed by a steady fall in consumer confidence since May and a slowdown in consumer spending since August, Mr Bhagavatula said in a note to investors.

"The real question is whether having waited so long, the Fed will opt for a bigger cut of the funds rate target," he says.

Now it may be up to a divided Congress after the mid-term elections to help boost the economy by fiscal means - if the two parties can agree on their approach to the Budget.