The Federal Reserve debated in October whether it needed more evidence the economy had been damaged by the housing slump and market turmoil before deciding to cut rates as an insurance policy, minutes of the meeting released on Tuesday show.

Many members noted that this policy decision was a close call, the minutes said.

The Fed projected U.S. growth to slow in 2008 to 1.8 percent to 2.5 percent, sharply down from the 2.5 percent to 2.75 percent growth forecast in June. Policy-makers lowered their forecast because of the tightened terms and reduced availability of non-standard mortgages, weakness in housing, and rising oil prices, a summary of the forecast said.

The Fed released a summary of its economic projections through 2010 with the minutes of the policy meeting.

The U.S. central bank trimmed benchmark interest rates by 0.25 percentage point to 4.5 percent at its October 30-31 meeting, making for a total of 0.75 point rate reductions at the last two meetings. Policy-makers opted for the October rate reduction because tighter credit had made the stance of monetary policy somewhat restrictive, the minutes said.

Fed members worried about financial markets that were still showing stress from concerns about bad credit.

Participants generally viewed financial markets as still fragile and were concerned an adverse shock ... could further dent investor confidence and significantly increase the downside risks to the economy, the Fed said.