First Fidelity Bancorp. lowered its prime rate by half a point to 5.5% Thursday, a move that other banks may follow today.

The rate cut was announced late in the morning, shortly after the nation's purchasing managers reported a sharp drop in business activity in September.

The release this morning of employment data for September is expected to buttress the case for further interest rate cuts by the Federal Reserve.

2.75% Fed Funds Rate Seen

Most economists expect the Fed to lower the discount rate to 2.5% from 3% and to nudge down its target for the federal funds rate to 2.7% from 3%.

That, in turn, would put pressure on commercial banks to follow First Fidelity's lead by lowering their prime lending rates to 5.5% from the prevailing 6%.

Depending on the severity of the September jobs data, a Fed easing could come either today or next week, economists said.

Gary Ciminero, chief economist at Fleet Financial Group Inc., said there's a "better than fifty-fifty chance" that the Fed will cut rates today.

Were it not for concerns about the weak dollar, the probability of a further Fed easing would be more like 90%, he added.

Brian Fabbri, chief economist at Midland Montagu, also expected a further cut in rates but said he thought the Fed would wait until after next Tuesday's meeting of the Federal Open Market Committee, the Fed's policymaking arm.

There were market rumors Thursday that the German Bundesbank and other central banks would join in a concerted credit easing either today or over the weekend.

But Ed Yardeni, chief economist at C.J. Lawrence, said he doubted the Bundesbank would go along. For that reason, he said, the Fed might not cut rates further, because that would add to the turmoil in the currency markets.

First Fidelity, which is based in Lawrenceville, N.J., is the nation's 23rd-largest banking company, with $29.3 billion in assets. The company declined to comment on why it cut its rate. Its stock rose 12.5 cents, to $35, in trading Thursday.

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