The US Federal Reserve had decided to hold its key benchmark US interest rate steady, opting to soothe rattled financial markets with central bank lending facilities rather than rate cuts.
The US central bank's decision leaves the interbank overnight federal funds rate at 2%, where it has been since April.
The move defied expectations of traders in the futures market of a quarter-point reduction in the wake of the bankruptcy of 158-year-old Lehman Brothers Holdings Inc, the sale of investment bank Merrill Lynch to Bank of America, and a scramble for cash by insurer American International Group Inc.
The swift-moving events have rattled global financial markets and threaten to exacerbate a credit crunch that has already helped push the US economy toward recession.
On Sunday, the Federal Reserve said it would accept a wider range of collateral, including equities, from investment banks seeking central bank loans in an effort to help keep markets functioning.
