The Federal Reserve slashed its key federal funds rate three-quarters of a point to 3.5% Tuesday in an effort to stave off recession fears.

“The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth,” the Fed said in a prepared statement. “While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction, as well as some softening in labor markets.”