The nation's economic policy-makers may, at long last, be getting it right.

That was the implicit message behind the revised budget and economic forecast issued last week by the Clinton administration. But it remains to be seen if the long-range growth, low inflation, and low interest rates projected by the Office of Management and Budget can come close to reality.

The good news is that professional economists in the private sector who took a hard look at the numbers issued by OMB believe they are realistic.

Donald Ratatczak, director of the economic forecasting center at Georgia State University in Atlanta, calls them credible. Similar comments come from Robert Giordano, chief economist for Goldman. Sachs & Co., and Bruce Steinberg, head of economic analysis at Merrill Lynch & Co.

Group Effort

The Clinton forecast is the product of months of computer modeling and consultation by the budget office, the President's Council of Economic Advisers, and the Treasury Department.

President Clinton is essentially holding out the possibility that the economy will continue to grow modestly through the rest of his term and beyond.

During that time, the hope is that the $500 billion deficit reduction plan will be implemented and inflation will not rise above 3 1/2%. Unemployment is expected to come down gradually.

Accordingly, the forecast calls for only a gentle upturn in short-term interest rates. It projects that the rate on 91-day Treasury bills will rise gradually from 3% to 4.5% by 1997. Long-term rates are expected to stay low, with the 10-year Treasury rate settling in at 5.9%.

Low-Rate Environment

These numbers paint a picture of a tight federal budget and an accommodative policy on interest rates by the Federal Reserve. While there is a built-in expectation that at some point the Fed will have to raise short-term rates, it can be argued that rates under the Clinton scenario will still be low by recent historical standards.

The aim is to have a policy combination of fiscal restraint, which slows the growth in government debt, and a soft stance on rates by the Fed. This is a reversal of the policy mix that prevailed in the 1980s, when a rising tide of consumer and corporate demand for credit and big deficits in a hot economy forced the Fed to keep rates high. As recently as 1989, short-term rates were at 10%.

"The policy is a lot better mix here," says Mr. Ratatczak.

The challenge for Fed officials will be to see if they can nurse a mild expansion without having to raise rates much to curb inflation.

Federal Reserve Board Chairman Alan Greenspan has indicated that, given the new complexities in today's financial markets, large rate moves may be needed. Part of the problem, he said in comments last month at an elite symposium in Jackson Hole, Wyo., is that the Fed does not have as much direct leverage as it used to over the economy.

Fed officials are anxious about the fact that banks supply a smaller share of credit to businesses and consumers than they did in the past. It is through control of bank reserves that the Fed influences short-term rates. But consumers and businesses have found plenty of channels for credit outside the banking system, and deposits are flat as savers pour money into stock and bond funds.

The Fed can still control short-term rates, Mr. Greenspan said, but it may take longer "and require larger movements in rates" for a given effect on U.S. output.

Only time will tell if the mild rise in rates envisioned by the Clinton administration turns out to be insightful or wishful thinking.

Last week's employment report from the Labor Department sent the yield on the 30-year Treasury bond crashing below 6%, and economists concluded that the Fed will have to retreat from its July threat to raise rates.

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