Economists worry that this Fed rate cut won't work either.

Byline: Ken Moritsugu

WASHINGTON _ The Federal Reserve cut a key interest rate for the seventh time this year Tuesday amid growing concerns that the sluggish U.S. economy isn't responding to the familiar medicine of lower interest rates.

The cut of a quarter percentage point brought the federal funds rate, charged on overnight loans between banks, to 3.5 percent, its lowest level in seven years.

The Fed, the nation's central bank, also signaled that it might cut interest rates again at its next meeting in October. The Fed warned that weak corporate profits and a global economic slowdown continue to weigh on the U.S. economy.

The apparent unresponsiveness of the economy to the cuts in the federal funds rate to date _ an unusually aggressive attempt by the Fed to boost the economy _ has raised concerns about whether the rate cuts are effective.

"Maybe the real question is not will the Fed do more, but will this cut or others really matter," said Joel L. Naroff, chief economist at Commerce Bank in Cherry Hill, N.J.

"The Fed's view of the economy was not as dire as in July, but still gave no sense that the Fed saw an imminent turnaround," said Bruce Steinberg, chief economist at Merrill Lynch & Co. in New York.