WASHINGTON — A dramatic cut in the Federal Reserve's discount rate cheered investors, but the spreading global credit crisis means the Fed will almost certainly have to do more.

A cut in the more important federal funds rate is expected to follow in short order as the central bank battles to keep the economy out of recession. Some economists believe the Fed could engineer more interest rate reductions at each of its three remaining meetings this year.

With his surprise announcement before Wall Street opened for trading yesterday, Federal Reserve Chairman Ben Bernanke, a former Princeton professor, went from being a "C" student in the eyes of investors to earning an "A-plus."

The Dow Jones industrial average shot up more than 300 points right after the opening bell and held on to most of the gains to finish the day up 233.08 at 13,079.08.

Bernanke found a clever way to give banks access to badly needed funds by cutting the discount by a half-point to 5.75 percent. That is the interest rate the Fed charges banks for direct loans.

The Fed's action was seen as a way to prod banks to step up their short-term lending in the face of a near paralysis in many debt markets. The current credit crisis began with rising defaults on subprime mortgages, loans made to borrowers with weak credit.

It marked the Fed's first change in rates between regularly scheduled meetings since Sept. 17, 2001, when the central bank was struggling to get financial markets back into operation after the terrorist attacks on the World Trade Center.

Even more important than what the Fed did yesterday was what it said.

In a brief statement, Bernanke and his colleagues on the Federal Open Market Committee said they judged that "the downside risks to growth have increased appreciably" and they were "prepared to act as needed to mitigate the adverse effects on the economy arising from disruptions in financial markets."

That statement was seen as a clear signal that the Fed had moved its "bias" — which signals the next direction for interest rates — from seeing inflation as the biggest economic threat to concern about weak growth. Fed worries about inflation mean possible interest rate hikes, while worries about growth mean possible rate cuts.

Bernanke's actions since Aug. 7 have helped him rebound from what was seen as an initial stumble. Since last Thursday, the Fed has pumped billions of dollars into the banking system in daily infusions to make sure banks have sufficient reserves to respond to borrowing demands from creditors who found their normal sources of money drying up.

Then with yesterday's cut in the discount rate and the statement signaling the Fed was contemplating cuts in the funds rate, the impression of Bernanke's crisis-management skills improved further.

"The Fed was behind the curve in dealing with this crisis before today. Now they are even with the curve," said David Jones, chief economist at DMJ Advisers, an economic consulting firm. "They now have a better chance of mitigating the damage from an all-out global credit crisis."