The Federal Reserve lowered the target for a critical short-term interest rate by a quarter of a point Wednesday, citing continued concerns about weakness in the housing market.But the Fed indicated that it is also worried about inflation, a sign that the central bank may be reluctant to cut rates again at its next meeting in December.

The Fed’s commentary about inflation spooked the markets at first, and stocks gave up much of their earlier gains from the day. But stocks eventually recovered and moved on to close up for the day.

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 January 2006.

Not all of the Fed’s policy committee members voted in favor of a rate cut, however. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, preferred no change to the federal funds rate. The Fed also lowered its largely symbolic discount rate by a quarter of a point to 5 percent. That decision was unanimous.

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 an attempt to limit the mortgage meltdown’s spillover into the broader economy.

The Fed’s commentary about inflation spooked the markets at first, and stocks gave up much of their earlier gains from the day. But stocks eventually recovered and moved on to close up for the day.

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 January 2006.