WASHINGTON - Two government economic reports released yesterday provide stepping stones to another possible interest rate cut by the Federal Reserve, analysts say.

The Commerce Department reported that retail sales deelined 0.5% in August, and the Labor Department reported that the August consumer price index rose 0.3%, and 0.2% excluding volatile food and energy prices.

"All those numbers suggest there's more room to ease interest rates," said Thomas Carpenter, chief economist of ASB Capital Management in Washington, D.C.

Mr. Carpenter and other economists said the "soft" retail sales number for August and the favorable consumer price report do not provide enough incentive alone to cause the Fed to lower rates. But they said the numbers set the stage for another ease if the September employment report is weak.

"Alan Greenspan would not change policy based on one month's worth of retail sales numbers," said Edward Campbell, a senior economist with Brown Brothers Harriman & Co., referring to the Federal Reserve Board's chairman. "But the odds are very, very high that the Fed will ease again if the employment report is weak."

Mr. Carpenter predicted that the Fed will cut the discount rate to 2.5% from 3% and the federal funds rate to 2.75% from 3% if the September employment report released Oct. 2 shows weak or neutral numbers.

He said even a "neutral report" that reveals no significant change in the overall unemployment rate or in payrolls would prompt the Fed to ease. Such a report "should be interpreted as a big negative" because it would show the economy is still not picking up, he explained.

Members of the National Association of Business Economists who are currently meeting in Dallas said yesterday's indicators, coupled with a sudden boost in the dollar after Germany cut short-term interest rates, make another move by the Fed more likely.

"I believe they'll cut the discount rate," said Stuart Hoffman, chief economist of Pittsburgh National Bank and a member of the association. "The Fed has ample room to lower the rate. And now that the Germans have done what they did, I think that gives the Fed wide-open running room."

Jay Woodward, a domestic economist of Bankers Trust Co. who was also at the Dallas meeting, concurred. "The dollar is no longer a major barrier as far as the Fed doing something on interest rates in the United States."

Like Mr. Carpenter, Mr. Hoffman said he expects the Fed to cut the discount rate by 500 basis points and the federal funds rate by 250 points if the employment report is weak. This would prompt banks to cut the prime lending rate to 5.5% from 6%, he added.

In general, economists described the August retail sales figure as a weak number in a long string of feeble numbers that show the economy has little upward momentum.

However, they also noted that the August retail sales report was mixed, corresponding to the economy's current trend of a step back for every two steps forward.

For example, August sales were down 0.5%, but the July estimate was revised up 0.5% to a gain of 1%, according to the Commerce Department report. The June figure was revised up 0.2% to a decline of 0.1%.

The report "was sort of a wash" in that respect, Mr. Woodward said.

The Commerce Department report also shows that the August decrease in sales was caused primarily by a 2.7% decline in sales of building materials and furniture and a 1.1% drop in automobile sales.

Separately, the Labor Department report says the 0.3% gain in the overall CPI, which was slightly higher than analysts expected, resulted in part from a 0.9% increase in volatile food prices.

But he said the 0.2% gain in the consumer price index, excluding food and energy, was in line with expectations. "I really look at the core rate," he said. "It's very consistent with modest inflation."

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