The Federal Reserve announced a cut to the key interest rate by 25 basis points, a move designed to provide stimulus to the U.S. economy. The decision comes as policymakers express concerns about the pace of economic expansion and the potential impact of ongoing credit market turmoil.

The reduction lowers the federal funds rate to 4.25%. This is the latest in a series of rate cuts implemented by the Fed in response to weakening economic data and increased financial market volatility.

In a statement released following the meeting of the Federal Open Market Committee (FOMC), the central bank acknowledged the risks to economic growth. The statement indicated that while inflation remains a concern, the committee believes that the downside risks to growth are now more prominent.

The Fed’s decision to cut rates reflects a delicate balancing act. Lower interest rates can help to boost economic activity by making it cheaper for businesses and consumers to borrow money. However, they can also contribute to inflationary pressures.

Economists are divided on whether the latest rate cut will be sufficient to avert a significant slowdown in the U.S. economy. Some argue that further rate cuts may be necessary, while others believe that the Fed should hold steady and assess the impact of previous policy actions.

The Fed will continue to monitor economic and financial conditions closely and will adjust its policies as needed to promote sustainable economic growth and price stability.