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The US Federal Reserve has announced that interest rates are to remain at 5.25 per cent amid concerns over inflation.

Headed by the macroeconomist Ben Bernanke, the central bank's committee acknowledged the recent problems in the US housing sector which has seen sales of new homes fall by nearly 17 per cent in recently months.

However the board asserted that the economy would continue to grow, albeit at a slower pace.

"Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters," a statement read.

The committee added: "Recent readings on core inflation have been somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilisation has the potential to sustain those pressures."

Some analysts see the new announcement from the Fed as a sign that higher rates will be off the agenda for some time. However the Federal Reserve noted that "future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth".

Yesterday's announcement saw US stock prices boosted, although at the same time the US dollar remained at its lowest against the euro for nearly two years.