The Federal Open Market Committee (FOMC), the Fed's rate-setting body, trimmed the target for the federal funds rate by 25 basis points to a range of 1.75 per cent to 2 per cent after concluding its two-day policy meeting, largely in line with market expectation, Xinhua reported.
Despite strong labour market and robust growth in household spending, "business fixed investment and exports have weakened", the FOMC said in a statement.
"On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 per cent," the central bank's inflation objective, the FOMC said.
Three of the 10 members of the committee voted against the quarter-point rate cut decision, highlighting growing split among monetary policymakers.
As in July, Federal Reserve Bank of Boston President Eric Rosengren, and Kansas City Fed President Esther George "preferred" to maintain the target range for the federal funds rate at the previous level.
St. Louis Federal Reserve President James Bullard, meanwhile, demanded a larger cut, by 50 basis points.
"As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion," the FOMC said.
( With inputs from IANS )