The U.S. Federal Reserve has cut its key funds rate 25 basis points, to 2%, according to a statement from the Federal Open Market Committee today.

This quarter point cut meets market expectations.

“Recent information indicates that economic activity remains weak,” said the statement. “Household and business spending has been subdued and labor markets have softened further. 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.”

The committee voted 8-2 in favour of the cut. As well, the Board of Governors unanimously approved a 25-basis-point cut in the discount rate to 2.25%.

The Fed has cut rates a total of 3.25 percentage points since last September, in efforts to revive the economy hit hard by a housing market crisis.

U.S. GDP grew 0.6% in the first quarter, according to data released today by the U.S. Commerce Department, which was ever-so-slightly better than market expectations.

The Fed said that despite improved readings on core inflation, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. It said it expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.

“Still, uncertainty about the inflation outlook remains high,” read the statement. “It will be necessary to continue to monitor inflation developments carefully.”

The Fed said its substantial easing of monetary policy of late combined with ongoing measures to foster market liquidity should “help to promote moderate growth over time and to mitigate risks to economic activity.”