The US central bank is expected to hold interest rates steady for the third straight month when it meets tomorrow and on Wednesday. The Federal Reserve will probably make only minor changes to the statement accompanying its decision to maintain rates at 5.25 per cent, retaining a tightening bias to keep inflation expectations at bay, while slower growth saps price pressures.

"The Fed wants to talk like a hawk and walk like a dove," said Josh Stiles, senior strategist at IDEA in New York.

Policymakers say they think price pressures will moderate as slower growth creates more slack in the economy. On the other hand, recent data have not given them much incentive to change their anti-inflation rhetoric, even if some of them privately don't see the risks to inflation as high.

September's core consumer price index, which strips out energy and food prices, rose 0.2 per cent from August, soothing fears it might have been higher. But it is still running near to 3 per cent on a yearly basis, well above the 1 - 2 per cent comfort zone voiced by a number of Fed policymakers.

Former Fed governor Lyle Gramley did not see this anxiety over prices translating into higher interest rates, at a time when the US economy is coping with a cooling housing market.

"The Fed is going to be patient. It is a soft economy and one in which you certainly would not want to be aggressive in fighting inflation," he said.