The Federal Reserve on Tuesday slashed its key interest rates by a quarter of a percentage point in an attempt to counter any further damage to the U.S. economy.

The rate reduction brought the federal funds rate to 2.75 percent from 3 percent.

The Fed rate cut was the ninth this year — and the second in just over two weeks — in the central bank's effort to stave off a recession, aggravated by the Sept. 11 attacks. The Fed last cut its rates on Sept. 17 in a surprise move.

Tuesday's action came at the end of the Federal Open Market Committee's regularly scheduled interest-rate session.

The rate cut was smaller than expected, as most market-watchers were expecting a half-point cut.

In a related action, the Fed Board of Governors approved a half-point reduction in the discount rate, which the Fed charges on loans to banks, to 2.25 percent.

To avert a full-blown downturn, the Federal Reserve has slashed interest rates nine times this year, beginning with five half-point cuts in the funds rate followed by two quarter-point moves on June 27 and Aug. 21, and by a half-point move on Sept. 17.

Reuters and the Associated Press contributed to this report.