WASHINGTON  Even if Congress approves President Bush’s $700 billion rescue plan for Wall Street, top officials at the Federal Reserve believe the economy will slow down more than they had expected as recently as July.

As a result, Fed officials are considering yet another reduction in the central bank’s benchmark interest rate. The matter is by no means settled, in part because some officials are skeptical that a reduction in the overnight federal funds rate would make much difference.

The biggest obstacle to economic activity right now is not the shortage of cash but the unwillingness of financial institutions to lend it out, even to each other. Overnight lending rates among banks remain far higher than the federal funds rate. The “TED spread,” the difference between overnight rates among banks and the yield on Treasury bills, hit a new record of 3.61 percentage points.

But Fed officials have been deluged with data suggesting that the underlying economy has slowed more than they had been expecting, and many private analysts contend the economy has already entered a recession. At the same time, inflation pressures have declined slightly, mainly because oil prices have declined from their record highs this year.