Inflation flashing red may be less of a green light for higherinterest rates as global growth falters.

Some Federal Reserve policy makers favor keeping their benchmarkrate close to zero until price increases reach a level VincentReinhart, a former top official, says could be 3 percent. The Bankof England has held its key rate at a record low even as U.K.inflation breached its 2 percent target for 21 months. Brazilexecuted a surprise cut Aug. 31 to safeguard its economy even afterinflation quickened to a six-year high.

Policy makers such as Fed Chairman Ben S. Bernanke and Bank ofEngland Governor Mervyn King may be challenging central-bankorthodoxy to replenish depleted toolkits and support recoveries atrisk of sliding back into recession. Tolerating higher inflationmay make long-term Treasuries less attractive while supportingstocks and commodity prices, said Jim Kochan, chief fixed-incomestrategist at Wells Fargo Advantage Funds.

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