NEW YORK (CNN/Money) - With Wall Street rejoicing over the Republicans' sweep of Congress and the resignation of Securities and Exchange Commission Chairman Harvey Pitt, the Federal Reserve might have to stop and think before it makes a dramatic cut in interest rates Wednesday.

Fed policy-makers are widely expected to announce at 2:15 p.m. ET that they are cutting their target for a key short-term interest rate by a quarter percentage point in an effort to goose the sluggish economy.

But many Wall Streeters think the outlook for the economy and for the stock market is suddenly a lot brighter, now that the Republicans are running Congress, offering the promise of big tax cuts and a business-friendly environment.

"That will be an important factor in the mind of the Fed," Lawrence Goodman, chief economist at Globalecon LLC, told CNNfn's CNNmoney Morning program. "The Republican victory certainly suggests that tax cuts will be more formidable, so that fiscal policy will be more flush."

Though Goodman expects the Fed to leave rates alone -- as it has all year following 11 rate cuts in 2001 -- Wall Street has priced in a rate cut and could be disappointed if the Fed does nothing.

On the other hand, Wall Street pretty much yawned at Fed cuts throughout 2001, and the combination of a Republican victory and the end of Pitt's troubled tenure could act as laughing gas and ease any pain the market might have felt from an inactive or cautious Fed.

"Moving by just [a quarter percentage point] or perhaps leaving rates unchanged has been made a lot more palatable by the events that have transpired in the past 24 hours," said Anthony Chan, chief economist at Banc One Investment Advisors.

But even if Fed Chairman Alan Greenspan and the other central bank policy-makers think Republicans will be good for the economy, they also likely recognize that it takes a long, long time to implement fiscal policy.

The Fed cuts rates to stimulate economic activity and raises them to slow the economy down and prevent inflation; monetary policy is widely seen as a much more flexible policy instrument than anything Congress can offer.

"The [economic] data are what determine what the Fed will do today; they don't see last night's result as a sea change," said Rory Robertson, interest rate strategist at Macquarie Equities USA, who thinks the Fed will cut a half-percentage point from its target for the federal funds rate, already at a 40-year low.

"The Republicans have control of the Senate, but the economy is still struggling," Robertson added. "Maybe [Republican control] will lead to some tax cuts, but that's not going to happen in the near term. The U.S. economy needs all the help it can get, and soon."