Washington  - The US Federal Reserve on Wednesday kept its key interest rate at a record low of 0.25 percentage points or less as the central bank works to revive borrowing and stabilize the financial system amid a serious ongoing recession in the United States.

The central bank first brought its federal funds rate down to an unprecedented range of 0-0.25 per cent in December. The Federal Open Market Committee, which sets the target, said it expects to keep rates low in the near future.

"The committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time," read a statement from the Fed, warning that the world's largest economy had "weakened further" since December.

The Fed also said it was prepared to use "all available tools" to help stabilize the financial industry, including expanding its own balance sheet in order to offer more loans to struggling banks.

Shares of financial firms led a rally on Wall Street Wednesday in anticipation of the Fed announcement and speculation on President Barack Obama's plans to help revive lending.

The central bank has already injected more than 1 trillion dollars into banks in exchange for troubled mortgage-related assets at the heart of the credit crisis.

The depth of the financial crisis has limited the Fed's ability to get results through traditional monetary tools. Wednesday's statement marked another shift in focus from the Fed's typical rate-setting role to its wider use of emergency lending programmes to keep banks afloat.

The Fed said it was also prepared to buy long-term Treasury securities to boost lending if "evolving circumstances" warranted such a move.

Banks have sharply restricted lending to consumers as they look to avoid bankruptcy and keep their own balance sheets intact.

"Credit conditions for households and firms remain extremely tight," the Fed warned, despite unprecedented government efforts to inject capital into struggling banks.

Obama is weighing a series of new measures to stabilize the financial system, which could be unveiled next week, according to US media reports Wednesday.

Obama could announce the creation of a so-called "bad bank," which would take the troubled mortgage assets off the balance sheets of banks and place them in a new government-backed entity.

The International Monetary Fund earlier Wednesday warned that global growth would slow to a near standstill this year and financial institutions could lose 2.2 trillion dollars before the crisis is over.

The IMF urged more "aggressive" measures by governments to stabilize the industry. (dpa)