There are signs that the recovery from recession is not stoking inflation. The cost of living in the US rose at a slower pace while manufacturing has expanded in the New York and Philadelphia regions. Reports from the Federal Reserve Banks of those cities indicate that factories increased production this month.

Fed policy makers favor keeping interest rates near zero for a long time to nurture the recovery from the worst recession since the 1930’s. The consumer-price report showing consumer prices rising 0.2 per cent in September, after a 0.4 per cent gain in August supports this policy decision.

Mark Vitner, a senior economist at Wells Fargo Securities LLC, North Carolina said “the economy still has a tremendous amount of slack and the low inflation numbers we are likely to see will give policy makers the flexibility to take their time in raising rates.”

Fed Vice Chairman Donald Kohn this week said that inflation and growth will probably stay below the central bank’s objectives for some time, warranting low interest rates for an “extended period.” New York Fed President William Dudley echoed the same opinion.

With a different view are Kansas City Fed President Thomas Hoenig and Fed Governor Kevin Marsh, who have both been among those saying that rate increases may happen sooner, or with more force, than some investors anticipate.