The Federal Reserve has held its key US interest rate steady at 2%, where it has been since April. The decision sent US markets down around 1%.
In a statement accompanying the decision, the Fed said the US economy faced risks on both growth and inflation.
Until recently, financial markets had expected the Fed to hold fire on rates, but there had been some expectations of a cut in the wake of the bankruptcy of Lehman Brothers and insurance group AIG's crisis talks on funding.
The Fed statement noted that 'strains in financial markets have increased significantly and labour markets have weakened further' since the last meeting in August but added that 'the downside risks to growth and the upside risks to inflation are both of significant concern'.
On Sunday, the Fed said it would accept a wider range of collateral, including shares, from investment banks seeking central bank loans in an effort to help keep markets functioning. It also pumped another $70 billion into money markets today.
