Fed chops quarter point off interest rate

The committee in a statement cited weak economic activity for its decision, pointing to subdued household and business spending, softened labor markets, stressed financial markets, tight credit conditions and worsening housing pains.

The committee also said it expects inflation to moderate in coming quarters, but uncertainty about inflation remains high.

This is the seventh cut to the interest rate since last September.

“The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity,” the statement said. “The committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.”

In a related action, the Fed’s board of governors approved a quarter-point reduction in the discount rate to 2.25 percent.