NEW YORK (CNNMoney.com) -- The Federal Reserve lowered the target for a critical short-term interest rate by a quarter of a point Wednesday, citing continued concerns about the housing market crunch.

The widely-expected move comes on the heels of a half-point rate cut by the central bank in September and leaves the federal funds rate at 4.5 percent, its lowest level since April 2001.

The federal funds rate, an overnight lending rate for banks, is important to the economy since it influences how much interest consumers pay on credit card debt, home equity lines of credit and auto loans. It also impacts how much it costs corporations to borrow money.

Weakness in the housing market and problems with subprime mortgages, loans made to those with less-than-perfect credit, have led to billions of dollars in writedowns at major financial institutions. For this reason, most investors believed the Fed would lower rates again in order to ensure that there is little spillover from the mortgage meltdown into the broader economy.

But some market observers have expressed concerns that with oil prices rising above $90, inflation may still be a threat. So the Fed could be making a mistake by lowering interest rates further, some maintain.

NEW YORK (CNNMoney.com) -- The Federal Reserve cut a key short-term interest rate by a half-percentage point Wednesday, its second significant cut in just over a week, as the central bank tries to combat the growing risk of a U.S. recession.

The federal funds rate, an overnight bank lending rate that affects how much interest consumers pay on credit cards, home equity lines of credit and auto loans, was cut to 3.0% from 3.5%. The rate had stood at 5.5% only four months ago.

The discount rate, which is what banks pay to borrow directly from the Fed, was also cut by a half-percentage point to 3.5% on Wednesday.

The Fed cut both rates by three-quarters of a percentage point in an emergency move on Jan. 22.

The rate cuts come on a day the government reported that economic growth slowed significantly in the last three months of 2007, matching its weakest performance of the past five years. It also comes as Congress rushes to pass a $150 billion economic stimulus package to spur spending by both consumers and businesses.