The Federal Reserve Board, acting to stem the economy's slide, yesterday cut a key interest rate for banks, a move that makes possible other declines in short-term rates that affect business, consumers and government.

In its latest move to deal with the economy's deterioration, the Fed reduced its discount rate -- the rate financial institutions pay when they borrow money directly from the Fed -- a half a percentage point, to 6.5 percent. Most analysts expect banks across the country to follow suit by cutting their prime lending rate by a similar amount. The prime rate currently is 10 percent.

Interest rates on loans for everything from new cars to homes are likely to drop as a result. Larger businesses that raise money directly in the credit markets should be able to borrow more cheaply as well.

Bush administration economists have acknowledged that the U.S. economy is slipping significantly, and on Sunday Treasury Secretary Nicholas F. Brady said the decline likely would continue at least into the first three months of 1991. The slump has already caused enough layoffs that the nation's unemployment rate stood at 5.9 percent last month, up from 5.2 percent earlier in the year.

Yesterday's action "was taken against the background of weakness in the economy, constraints on credit and slow growth" in the nation's money supply, the Fed's announcement said. "The reduction, in part, realigns the discount rate with market interest rates."

The Fed decision also appeared to reflect concern over the health of the nation's banks, which are facing mounting losses from problem real estate loans in several parts of the country. While the effect would be more indirect, interest rate reductions the Fed has engineered over the past month and a half could help slow the decline in real estate values by lowering the cost of financing real estate purchases and encouraging buyers to enter the market.

At the White House, presidential spokesman Marlin Fitzwater welcomed the action. "It should be helpful in promoting growth in the economy in the months ahead," Fitzwater said. "This move appears justified by the {federal} budget agreement and the general slowdown." President Bush and Congress agreed last month to reduce prospective budget deficits by nearly $500 billion in coming years partly in hopes it would encourage the Fed to reduce interest rates.

The Fed made its decision public 30 minutes before New York financial markets closed. The news triggered a stock market rally, with the Dow Jones average of 30 industrial stocks rising 33.41 points to close at 2626.73.

There was no mention of inflation in the announcement, but the Fed may have been encouraged to reduce rates by a report yesterday from the Labor Department that consumer prices rose only 0.3 percent in November, half the October increase and the smallest monthly rise since May. Energy commodity prices, which had soared 28.9 percent over the previous three months following the Iraqi invasion of Kuwait, fell 0.3 percent last month, the department said.

This slowing of inflation, if it continues, could also help slow the economy's decline. The sharp rise in oil prices left consumers with less money to spend on other goods. A drop in consumer spending, particularly for new cars, has been a major factor in the economic slump.

With the cut in the discount rate, the central bank also cleared the way to lower its 7.25 percent target for the federal funds rate. The federal funds rate, which usually is kept higher than the discount rate, is the interest rate banks pay when they borrow cash from one another.

The language of the announcement suggested that the funds rate target will be dropped to 7 percent today but not to 6.75 percent. Since most other short-term rates are linked by market forces to the federal funds rate, the quarter-point decline should be reflected throughout the money market.

Some financial analysts regarded the Fed action as an aggressive one that indicates Federal Reserve policy makers are very worried about the state of the economy.

"I really thought they would hold off" until early next year to cut the rate, said Alan Leslie, chief economist at Discount Corp. of New York, a government securities dealer. "The fact that they cited all those three reasons ... indicates they are trying to move ahead more aggressively than before. They have come to the conclusion that the economy is weaker than they have thought."

Fed sources said analysts should not read any particular meaning into the fact that the announcement came on the same day as a meeting of the Fed's top policy-making group, the Federal Open Market Committee, rather than on the following day. The FOMC, which sets the federal funds target, met yesterday morning. The Fed board, whose six members along with five presidents of regional Federal Reserve banks make up the FOMC, met after lunch to vote to cut the discount rate.

The discount rate was last changed in February 1989, when it was raised from 6.5 percent to 7 percent. Yesterday's action was the first to reduce the rate since August 1986, when it was cut from 6 percent to 5.5 percent.

In the Labor Department report on consumer prices, there was a distinct slowing of inflation. After the invasion of Kuwait, the consumer price index rose an average of 0.7 percent in August, September and October, compared with last month's 0.3 percent increase.

Aside from the absence of further energy price hikes, the CPI rose less because of a drop in apparel prices and smaller increases in the cost of housing. The department's index that tracks the value of the services a homeowner receives in the form of shelter from his house -- it is measured by checking rents in similar houses paid by tenants -- was unchanged for the second month in a row.

Over the past three months, the portions of the CPI other than food and energy rose at an annual rate of 3.6 percent, down from 6.4 percent in the three months ended in August.