WASHINGTON (AP) - A sharply divided Federal Reserve cut its benchmark interest rate on Wednesday (Sept 18) for a second time this year but declined to signal that further rate cuts are likely this year.

The Fed's move reduced its key short-term rate - which influences many consumer and business loans - by an additional quarter-point to a range of 1.75 per cent to 2 per cent.

The action was approved 7-3, with two officials preferring to keep rates unchanged and one arguing for a bigger half-point cut. It was the most Fed dissents in three years.

The divisions on the policy committee underscored the challenges confronting chairman Jerome Powell in guiding the Fed at a time of high uncertainty in the United States economy.

Stock prices initially fell after the Fed issued its policy statement, reflecting investor disappointment that the central bank had declined to indicate that more rate cuts were likely this year. The S&P 500 and the Dow reversed losses to close slightly higher while the Nasdaq dipped.

The Fed did leave the door open to additional rate cuts - if, as Mr Powell suggested at a news conference, the economy weakens.

For now, the economic expansion appears durable in its 11th year of growth, with a still-solid job market and steady consumer spending. But the Fed is trying to combat threats including uncertainties caused by President Donald Trump's trade war with China, slower global growth and a slump in American manufacturing. The Fed noted in its statement that business investment and exports have weakened.

At his news conference, Mr Powell acknowledged that Fed officials are sharply divided about the wisest course to take on interest rates.

"This is a time of difficult judgments and disparate perspectives," the chairman said.

"I really do think that is nothing but healthy."

The Fed's modest rate cut on Wednesday irritated Mr Trump, who has attacked the central bank and insisted that it slash rates more aggressively.

The President immediately signalled his discontent. "Jay Powell and the Federal Reserve fail again," Mr Trump tweeted. "No guts, no sense, no vision! A terrible communicator!"

Updated economic and interest rate forecasts issued on Wednesday by the Fed show that only seven of 17 officials foresee at least one additional rate cut this year. And at least two Fed officials expect a rate hike next year.

None of the policymakers foresee rates falling below 1.5 per cent in 2020 - a sign that the turbulence from a global slowdown and Mr Trump's escalation of the trade war is viewed as manageable.

The median forecasts show the economy is expected to grow a modest 2.2 per cent this year, 2 per cent next year and 1.9 per cent in 2021. Those forecasts are well below the Trump administration's projection that the President's policies will accelerate growth to 3 per cent annually or better. But they also suggest that policymakers do not envision a recession.

Unemployment is projected to be 3.7 per cent and inflation 1.5 per cent, below the Fed's target level of 2 per cent.

A resumption of trade talks between the Trump administration and Beijing and a less antagonistic tone between the two sides have supported the view that additional rate cuts might not be necessary. So has a belief that oil prices will remain elevated, that inflation might finally be reaching the Fed's target level and that there are increasing signs that the US economy remains sturdy.

The job market looks solid, wages are rising, consumers are still spending and even such sluggish sectors as manufacturing and construction have shown signs of rebounding.

Yet no one, perhaps not even the Fed, is sure of how interest rate policy will unfold in coming months. Too many uncertainties exist, notably the outcome of Mr Trump's trade war.

Mr Trump has, in the meantime, kept up a stream of public attacks on the central bank's policymaking, including referring to Mr Powell as an "enemy" and the Fed's policymakers as "boneheads".

Even though the economy looks resilient, the President has insisted that the Fed slash its benchmark rate more deeply - even to below zero, as the European Central Bank has done - in part to weaken the US dollar and make American exports more competitive.

Mr Powell has said that the policymakers remain focused on sustaining the expansion and keeping prices stable without regard to any outside pressures.

The Fed is monitoring the global slowdown, especially in Europe, and Britain's effort to leave the European Union. A disruptive Brexit could destabilise not just Europe but the US economy, too.

US inflation, which has long been dormant, has begun to show signs that it is reaching the Fed's 2 per cent target and might remain there. If the Fed's policymakers conclude that inflation will sustain a faster pace, it might give them pause about cutting rates much further.

The most serious threat to the expansion is widely seen to be Mr Trump's trade war. The increased import taxes he has imposed on goods from China and Europe - and the counter-tariffs other nations have applied to US exports - have hurt many American companies and paralysed their plans for investment and expansion.

In recent days, the Trump administration and Beijing have acted to de-escalate tensions before a new round of trade talks planned for October in Washington. Yet most analysts foresee no significant agreement emerging this fall in the conflict, which is fundamentally over Beijing's aggressive drive to supplant America's technological dominance.