The U.S. economy absorbed the blow from hurricanes Katrina and Rita and kept growing, the Federal Reserve said in a survey of regional economies known as the beige book.

In some regions, such as the Richmond Fed district, growth in September and early October "expanded at a somewhat quicker pace" as services and manufacturing "gained some momentum." However, most districts described the pace of activity as moderate or gradual, the report said.

Central bankers emphasized yesterday that they may keep raising interest rates to pare inflation risks.

The Fed survey is based on information collected before Oct. 11 and supplied by the 12 regional Federal Reserve banks. The report will figure into the discussions and decision-making of Fed policy- makers at their next meeting Nov. 1.

While economic activity continued to expand after the August and September hurricanes that hobbled oil and gas facilities, the storms' impact could be seen everywhere. All regions reported rising costs for energy, building materials, shipping and other items. Reports from several regions suggested that some of the increased costs are being passed along to consumers.

"In Richmond and Atlanta, retailers and other business firms reported passing their cost increases through into their selling prices, and in Philadelphia and Dallas, large numbers of business firms said they have raised, or plan to raise, their prices," the Fed survey said.

Many economists believe the Fed will boost short-term interest rates by one-quarter of a percentage point, to 4 percent, at the November meeting to fend off inflation. Such a move would mark the 12th increase of that size since the Fed began to tighten credit in June 2004.

In the Fed survey, general retail sales rose in most of the Fed's districts. Auto sales, however, fell in all areas as manufacturers ended discounts.

Manufacturing expanded in all regions except for St. Louis and Atlanta, the Fed district that includes areas hit hardest by the hurricanes.