The Federal Reserve cut U.S. interest rates a quarter percentage point Tuesday, extending one of the most aggressive rate-cutting campaigns in its history as it tries to lift the economy out of recession. Fed policymakers said the economy was soft and there were only tentative signs weak demand was firming -- a statement some analysts took to mean the rate-easing cycle was not yet over.

The widely expected cut lowered the federal funds rate charged on overnight loans between banks to 1.75 percent, the lowest in 40 years. It was the 11th rate reduction by the U.S. central bank this year, a bold bid to boost consumer and business confidence with unemployment at a six-year high.

In a statement explaining the decision, policymakers said economic risks remained tilted toward weakness, implying they will cut rates again if necessary even though -- according to one measure of inflation -- the real interest rate now stands below zero in inflation-adjusted terms. Bureau Report