From our editorial today:

Last Friday the U.S. Federal Reserve cut the rate at which it makes direct loans to banks, sending a signal to Wall Street that it is aware of the credit contraction that has hit global financial markets. At the same time, the Fed wisely refrained from lowering its target federal-funds rate, through which it controls monetary policy, although Fed officials have indicated that a cut could be in the offing if markets don’t stabilize soon. The Bush administration has also demonstrated admirable restraint, resisting calls to let troubled mortgage buyers Fannie Mae and Freddie Mac charge into the market and increase their holdings.