The International Monetary Fund says it expects the global economy to slow significantly this year because of credit market turmoil stemming from a U.S. housing slump.

The IMF lowered its global growth forecast for 2008 to 4.1 percent, down from last year's estimated growth of 4.9 percent. Its previous growth forecast for 2008 was 4.4 percent.

The new IMF forecast Tuesday predicts U.S. economic growth will slow to 1.5 percent in 2008.

The U.S. central bank began a two-day meeting Tuesday to discuss further cutting interest rates in an effort to boost the economy and stop a sell-off in global stock markets.

Chinese investor examines stock price monitor in Shanghai, 28 Jan 2008

Last Tuesday, after significant losses on world stock markets, the Federal Reserve cut its key interest rate by 0.75 percent, to 3.5 percent.  A further cut of at least a 0.25 percent is expected when the Fed meeting ends Wednesday.

The IMF update warns that ongoing financial market turmoil could further reduce domestic demand in developed economies and create "significant spillovers" into emerging markets.

The leaders of Britain, France, Germany and Italy are meeting in London today to discuss how to respond to the turmoil and to try to reassure investors about the health of the European economy.

Some information for this report was provided by AFP, AP and Reuters.