US Fed maintains key interest rate at near-zero levels

The US Federal Reserve has retained its benchmark rate at near-zero levels while saying that economic conditions are likely to warrant low interest rate regime for an "extended period".

The apex bank has kept rates in the range of 0 to 0.25 per cent since December 2008, as part of efforts to tackle the financial turmoil. After its two-day meeting on Wednesday, the Fed said the federal funds rate would be maintained at 0 to 1/4 per cent.

The Federal Open Market Committee (FOMC), which decides the American monetary policy, said it "continues to anticipate that economic conditions, including low rates of resource utilisation, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period".

Even though the economy is growing at over five per cent, the country's labour market continues to remain sluggish with unemployment rate hovering over nine per cent.

In a statement, the central bank said that economic activity has strengthened in recent months while the employment market is slowly improving. "Housing starts have edged up but remain at a depressed level.

"While bank lending continues to contract, financial market conditions remain supportive of economic growth," it added.

The Fed noted that it would continue to monitor the economic outlook and financial developments and would employ policy tools as necessary to promote economic recovery and price stability.

In the wake of the ravaging financial crisis, the US came up with massive stimulus measures running into billions of dollars, to bolster the nation's sagging economy.