Inflation has been low because the fed is keeping that way. The fed is walking a tight rope. Raising them will cause the holders of u.s. government T-Bills to cash them in while they're worth something. Keeping the rates down encourages them to hold onto those IOU's a bit longer and continue the charade.

What we are seeing is quantitative easing. Pay closer attention to what you're buying at the grocery store. That 16oz bottle of ketchup is now 15.4oz and at the same price.