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The US Federal Reserve has unanimously decided to leave interest rates unchanged at 5.25 percent for the eighth time in a row.

Data for the first quarter of 2007 released on Thursday showed that the world's largest economy had achieved its lowest rate of growth in four years.

The economy grew by 0.7 per cent compared with the 2.7 per cent growth achieved in the corresponding period of last year.

These figures indicated that the Federal Reserve may change interest rates to address concerns about the US economy.

In a cautious statement, the Fed explained its decision: "The economy seems likely to continue to expand at a moderate pace over coming quarters. Readings on core inflation have improved modestly in recent months."

It added that the high level of resource utilisation in the economy could curb inflationary pressures.

The bank said its central concern was that "inflation will fail to moderate as expected" and warned that "a sustained moderation in inflation pressures has yet to be convincingly demonstrated".

Fears of inflation had recently crept into the market after the global oil price recently crossed $70 (£34.9) a barrel in London and New York.

The Bank of England has raised interest rates four times since August 2006 in order to curb inflation.