Tomorrow is the showdown at the OK Corral for Bernanke and the FOMC. I personally think Bernanke is a terrific economist who has inherited a truly tough situation and done well so far.
I think the Fed would be best served by making a clear stand one way or the other. Either hold steady against moral hazard and inflation or make a real, significant, sizeable rate cut to try and forestall (or minimize) a recession.
A .25 rate cut doesn't do anything really, it's the conventional wisdom, but really it's an empty gesture that leaves the Fed's intentions unclear, and people on both sides of the issue dissatisfied.
So stand pat or go big I say! Personally, I'd stand pat. I'd send a clear message that, as long as I am Chair, the Fed will focus on inflation first and foremost, but I could accept a clear signal of the other kind.