The Federal Reserve lowered the federal funds rate by 25 basis points to 2%, giving this explanation:
Recent information indicates that economic activity remains weak. 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 substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
Still, markets had a mixed reaction to the news, with stocks ultimately ending lower after initially rising after the announcement. And keep in mind, the interest rate was at 4.25% at the beginning of the year.
Oil prices are also at a high, so the Fed is also monitoring inflation, and consumer spending has stagnated during the first quarter. Analysts don't expect the Fed to cut rates again--and they do expect a recession.