Washington ? The Federal Reserve is widely expected to cut its benchmark interest rate Tuesday for the first change since June 2006. Given what’s roiling Wall Street, however, it might prove akin to offering a Band-Aid to stop a stomachache.

In recent speeches, Fed governors have all but confirmed that a cut is coming from the Federal Open Market Committee, the Fed’s policy-making group. Most Wall Street economists expect a cut of a quarter-percentage point, bringing its benchmark fed funds rate – the fee that banks charge each other for overnight loans – down to 5 percent. The funds rate influences interest rates on a wide array of commercial and consumer loans.

Some analysts argue for a more aggressive rate cut of half a percentage point, to 4.75 percent, in an effort to boost consumer spending, which drives about two-thirds of the U.S. economy.

But even the steeper cut might do little for the underlying causes of Wall Street’s heartburn. The problem isn’t that it’s gotten too expensive to borrow – something a rate cut would help – but that lenders are afraid to lend, and investors afraid to invest.

Since June, Wall Street has fretted about huge losses from subprime mortgages, those issued to borrowers with the weakest credit histories. These loans were bundled and sold to investors as high-yield mortgage bonds. Many of these subprime loans involved rates that are poised to adjust to much higher monthly payments, sparking fears of massive foreclosures and defaults on these mortgage bonds.

These fears began spilling over into other areas in August, and now threaten the broader U.S. economy. The fears are most evident in markets for commercial paper, the short-term debt that corporations issue to generate working capital. Even with high rates of return, investors aren’t interested now in buying these debt instruments, which traditionally have been viewed as among the safest of investments.

That may blunt the impact of any Fed rate cut.

“Monetary policy is unlikely to have much effect this time around – even if the Fed reduces interest rates by 50 basis points (half a percentage point) – because the problem is that there is so much risk out there that is unknown,” said Robert Reich, a former economic adviser and labor secretary to President Clinton.

Problems in the commercial paper market affect the broader real economy. When buyers of commercial paper demand a higher return, it raises the cost of doing business for companies. That makes them less profitable, and that, in turn, makes them less likely to increase wages, hire or expand.

U.S. payrolls shed 4,000 jobs in August, surprising analysts by how much economic weakness is spreading.