(Bloomberg) -- The Federal Reserve lowered the main U.S. interest rate by a quarter of a percentage point to 2 percent and indicated it's ready to take a break after seven cuts since 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,'' the Federal Open Market Committee said in a statement after meeting today in Washington.
``The committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.''
While a nine-month contraction in credit and soaring fuel prices have pushed the economy to the edge of a recession, confidence has begun to return to financial markets. Inflation expectations are also picking up, driven by near record prices for oil and higher food expenses. Stocks pared gains after the decision, while the dollar and Treasury notes were little changed.
``The Fed is buying extra insurance against a deeper recession,'' said Arun Raha, vice president and senior economist at Swiss Re. ``The Fed will be reluctant to cut any further.''
The central bank added that ``financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.''
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