Federal Reserve policymakers meet this week in Washington to ponder whether business conditions are weak enough to warrant another interest rate reduction.

The decision may not be easy. No firm consensus appears to exist among economists about how the economy is faring. Some think conditions are weak and getting weaker. Others are more confident and see no pressing need for stimulative action by the Fed.

Reflecting that division of opinion, the Recession Watch Index at Detroit's Comerica Bank continues to signal that the chances of recession this year are just under one in two. The index has barely moved in six months.

"The index still basically suggests there is an even-money chance of the economy dipping into negative growth territory in the next year or so," said James M. Bills, a Comerica economist.

Mr. Bills said he thinks the Fed will cut short-term rates by 25 basis points this week, matching the cut it made in December. "It's a toss-up right now, but we think they are probably leaning that way," he said.

Comerica's index, which at this time last year showed only a 17% chance of recession, is a weighted average of three leading indicators: the spread in the Treasury yield curve, adjusted bank reserve growth, and the index of leading economic indicators.

"It's an extremely close call for the Fed," agreed Anthony Karydakis, senior financial economist at First National Bank of Chicago, a unit of First Chicago Corp. "I don't think there is a very clear-cut case to be made either way on a rate cut."

The central bank has shown it is ready to help the economy with lower rates, he said, but could also opt to do nothing at this week's meeting and await more economic data. He put the chances the Fed will not act at 51%.

Among those more definitely expecting Fed action is Mickey D. Levy, chief economist at Nationsbanc Capital Markets, a unit of NationsBank Corp. "There is more than a 50-50 likelihood that the Fed will lower rates," he said.

Indeed, Mr. Levy thinks the Fed "desperately needs to ease" credit. "The rate of economic growth is weak and decelerating," he said. "I think the economy is weaker than the numbers show it to be right now."

Mr. Levy stops just short of predicting recession this year. He prefers to say instead that "we are heading down to undesirably low growth rates."

He feels the nation's economic output grew at an annualized rate of just 1.5% in the fourth quarter and may be slowing to a barely perceptible 1% in the current quarter.

The economist assessed monetary policy as still too restrictive, despite rate cuts by the Fed last July and December.

The Fed should drop its target for the federal funds rate, the overnight rate for interbank loans, to 5% from its current 5.5% level, he said. Indeed, Mr. Levy thinks the funds rate will be "in the fours" by the yearend.

Rates are probably too high because the central bank worries too much about inflation, he said. In fact, the real current risk to price stability is that the economy will turn down "and the Fed will have to chase it" with lower rates and expanded credit.

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