Federal Reserve policy makers remain worried about the housing slump dragging the economy further down, according to minutes of the Fed's last interest rate meeting on Oct. 30-31.  

Accompanying the minutes for the first time, under a new policy of transparency, was the Fed's "summary of economic projections."

The Fed is now expecting the economy to slow to an annual pace of 1.8 to 2.5 percent next year, down from its previous forecast in June of growth of 2.5 to 2.75 percent. The central bank said its revision "stemmed from a number of factors, including the tightened terms and reduced availability of subprime and jumbo mortgages, weaker-than-expected housing data, and rising oil prices."

Despite the risks to growth that the minutes and projections highlighted, the decision to cut interest rates by a quarter point at the October meeting came after much debate. The decision to cut, the minutes say, was "a close call."   

Still, in the end, the minutes said, "most members saw substantial downside risks to the economic outlook and judged that a rate reduction at this meeting would provide valuable additional insurance against an unexpectedly severe weakening in economic activity.''

A rate cut had been widely anticipated by investors, who were disappointed by the statement that accompanied it, indicating that the Fed was done with lowering rates for the time being. The Fed is still expected not to make any change in monetary policy when it next meets on December 11.

In the October statement, the Fed said the risks to growth and the risks of inflation were roughly balanced. According to the minutes today, Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City voted against a rate cut, arguing that no change would "better hold inflation in check."

The October minutes paint an economy that had steadied from the turmoil of the late summer but remained vulnerable because of housing, "the stress in the credit markets," restrained consumer spending, and higher oil prices.

Fed policy makers also remained concerned about the financial markets.

"Participants generally viewed financial markets as still fragile and were concerned that an adverse shock—such as a sharp deterioration in credit quality or disclosure of unusually large and unanticipated losses—could further dent investor confidence and significantly increase the downside risks to the economy."