The Federal Reserve has announced that US interest rates are to be held at 2%, amidst continuing worries in the housing market and consumer confidence allegedly at its lowest level in 16 years.

The move was an expected one, with analysts stating that the Federal Reserve is facing a balancing act, as it copes with rising prices and economy slowdown. A recent survey has suggested that house prices were significantly lower in April, compared to the same time last year.

This latest interest rate news has meant that it is the first time in 10 months that the Federal Reserve has failed to reduce its interest rates.

Holding the interest rates at 2% was approved by a 9 to 1 vote, with calls for a rise in rates to fight inflation. Economists reacted by warning that rising interest rates could increase the economic slowdown caused by the credit crunch and housing market crisis.