The US central bank has opted to leave interest rates unchanged at 2%, rejecting calls for a cut.
While President Bush says US economy can withstand financial market turmoil ...
South Korea in talks with Lehman ...
Iran urged to free HIV pioneers ... the Federal Reserve had been tipped to leave rates on hold, analysts said a cut looked likely after the recent collapse of Lehman Brothers.
The Fed has sought to soothe nerves and earlier injected $70bn (Ј39bn) into markets to boost liquidity.
Central banks worldwide have faced the twin threat of quickening inflation and a wider economic slowdown.
The US benchmark interest rate has been at 2% since April.
US shares, which had risen slightly before the announcement, shed 106 points to 10,811 soon after news.
Traders had hoped the central bank would cut rates in a bid to boost the economy.
Investment firm Lehman Brothers filed for bankruptcy on Monday while the future of insurance giant AIG remains uncertain.
(BBC)
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