Fed policy makers meet next on November 16, and many on Wall Street had been convinced they would nudge interest rates a notch higher.

The central bank's Federal Open Market Committee (FOMC) met on October 5 and, even though the policy makers decided then to leave their target for short-term rates steady at 5.25 per cent, they adopted a "bias" toward raising them at some point in the future.

But housing starts and auto sales have dropped and although labour costs are increasing, they aren't accelerating, factors that could work against a near-term increase in rates, Berry wrote.

The Fed's own survey of nationwide economic conditions released on Wednesday showed that the nation's strong growth may be starting to weaken. Several of the 12 regional Federal Reserve banks found some mild slowing in consumer spending, construction and consumer loan demand.

"There is nothing in the numbers to suggest that inflationis about to jump up and get us," Edward G Boehne, president of the Philadelphia Federal Reserve Bank, told the Post in an interview.

"Jobs are plentiful, but that's more of the same that we have seen over the years... we know there is some risk out there of more inflation, but it has not materialised (and it) may or may not materialise," the Post quoted Boehne as saying.

Other members of the FOMC, the Fed's policymaking group, are divided over the best course for the central bank to follow, Berry reported, citing interviews with several of them. He gave no direct quotes from other FOMC members.

With the economy growing rapidly at a time the nation's unemployment rate is just 4.2 per cent, a few FOMC members would prefer to raise rates because they expect that, sooner or later, inflation will get worse if US labour markets remain so tight, Berry reported.

But Boehne said, "sooner or later we will have an ice age, but we don't have to go out and get huge furnaces right away."

Federal Reserve chairman Alan Greenspan last week said he is concerned the economy has been growing at an unsustainable rate, noting that the pool of people seeking jobs has declined from 11.2 million to 9.6 million over the past two years.