Central bankers and top academics departed here on Sunday after two days of discussions on how the global economic landscape is shifting.

But they said goodbye still divided on what is perhaps the biggest question hanging over the outlook, whether an unfolding slowdown in the U.S. economy will curb U.S. inflation without further interest-rate rises from the Federal Reserve.

While Fed policy was not a primary focus of the formal discussions at the Kansas City Federal Reserve Bank's annual Jackson Hole retreat, it was a hot topic on the sidelines.

I think this is a time of a fair amount of uncertainty, because certainly there seems to be a shifting in the United States, IMF chief economist Raghuram Rajan said. We're not quite sure if inflationary pressures are contained ... and we are also not sure how far and how quickly housing will slow.

After two years of steadily pushing benchmark borrowing costs higher, the U.S. central bank stepped to the sidelines at its last meeting on August 8, preferring to wait for more data shedding light on the outlook for growth and inflation.

A downturn in the U.S. housing market is seen cutting the wherewithal of U.S. consumers, who have been able to tap the equity fast rising home prices had provided to maintain their free-spending ways.

Former Brazilian central bank chief Arminio Fraga fretted that a slowdown in the United States, for years an engine supporting growth around the globe, could exact a big toll on economies elsewhere.

Can the world make up for what is likely to be a slowdown in (U.S.) growth, maybe even a bigger slowdown than one expects at this point, certainly a deeper slowdown than markets are pricing in? Fraga asked conference participants.

DONE YET?

Financial markets are largely convinced the Fed is finished raising interest rates and look for U.S. policy-makers to lower credit costs next year.

Former White House economic adviser Glenn Hubbard, dean of Columbia University's Graduate School of Business, suggested it might be wiser for the Fed to resume its credit-tightening course.

It is a very difficult moment for the Fed to achieve both the desired fall in inflation and the soft landing in the real economy at the same time. It's easy to do one or the other; it's a little more difficult to do both, he said.

A similar debate appears to be unfolding at the Fed.

Richmond Federal Reserve Bank President Jeffrey Lacker voted against the majority of policy-makers at the central bank's August meeting, preferring to bump borrowing costs up another notch.

Analysts are keenly awaiting minutes of that session, which will be released on Tuesday, to see if his concerns were more widely shared.

TAKING A RISK

While oil prices have given a big boost to overall U.S. inflation, the Fed has kept its sights firmly set on ensuring other prices stay under wraps.

If they do, the energy-led rise in inflation should prove a one-off phenomenon.

When your faced with a terms of trade shock, such as an oil shock, there's logic to allow inflation to rise above target, Harvard University professor and former IMF chief economists Kenneth Rogoff said in what amounted to a defense of the Fed strategy.

In response, Bank of England chief economist Charles Bean said such an approach risked denting the central bank's inflation-fighting credibility, and urged erring on the side of caution.

To me, the most important issue is not whether there is a theoretical case for such accommodation. Rather it is whether there are likely to be any adverse effects on inflation expectations and credibility from doing so, he said.

Inflation U.S.