Interest rates are headed lower south of the border, Global Insight Inc. predicts.

Following Federal Reserve Board chairman Ben Bernanke’s statements on monetary policy and the credit crunch, Global Insight concludes the Fed is poised to move quickly and lower the federal funds rate on any evidence of economic weakness.

Bernanke spoke to a symposium of central bankers Friday regarding the Fed’s decision on Aug. 17 to lower the discount rate, broaden the terms on discount window borrowing and issue a revised economic statement.

“In particular, the deterioration of financial market conditions, combined with the tightening of credit in the first two weeks of August, had appreciably increased the downside risks to growth,” Global Insight reports. “More specifically, the further tightening of credit conditions increased the risk that the weakness in the housing sector would be deeper and more prolonged than expected, with possible adverse affects on consumer spending and housing more generally.”

It adds: “The bottom line here is that the Fed stands ready to act if recent developments in the financial markets have broader economic effects, and will be putting greater emphasis on more forward-looking indicators and its own surveys to govern upcoming decisions.”

Global Insight expects that the recent tightening of credit conditions and contraction of credit in the broader securities markets to have a material slowing impact on economic growth in upcoming months. It expects the Fed to respond by lowering the federal funds rate by 50 basis point­75 bps, with a 25-bps reduction expected on or before the meeting of the Federal Open Market Committee on Sept. 18.