The US Federal Reserve held benchmark interest rates steady today and maintained a warning on inflation risks as it noted signs of stability emerging in downtrodden housing markets.
The widely expected decision by the central bank's Federal Open Market Committee to hold the overnight federal funds rate at 5.25 per cent - the level it hit in June after 17 straight quarter-percentage point increases - was unanimous.
In a statement outlining its decision, the Fed said it continues to focus on inflation risks and once again held out the option of raising rates to tamp down price pressures.
"The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth," the Fed said, expressing concern tight economic conditions may make it hard to bring inflation down.
Prices for US stocks and government bonds rose and the dollar weakened after the rate announcement.
"The Fed recognizes that the economy has improved modestly and inflation has abated somewhat," said Tom Sowanick, chief investment officer at Clearbrook Financial in Princeton, New Jersey.
The Fed's decision after a two-day meeting comes with the US economy showing some vigor despite a housing slump that the central bank referred to as "substantial" after its prior meeting in December. At the same time, however, there are signs inflation is easing.