Have interest rates peaked? Maybe, but bankers should not rule out further increases in light of the nation's amazingly resilient economy, economists say.

The case against further rate hikes is based on chances of a gradual cooling of business conditions next year. But just such an economic "soft landing" was forecast for the last several years and failed to happen.

Instead, economic growth has barreled ahead - at an estimated 5.5% annual rate in the third quarter - fed by consumer spending, which was encouraged by the robust stock market and the best job market in three decades. The Federal Reserve has raised short-term rates three times since June, so far with little impact.

"I think we are probably very close to the peak of interest rates," said Anthony Chan, chief economist at Banc One Investment Advisors in Columbus, Ohio, "but the economy continues to surprise us on the up side. So next year it's possible we could see the Federal Reserve do a Freddy Krueger - coming back, if conditions remain too strong."

Having a strong economy, with its inflationary portents, "is like waving a red flag at the Fed," said economist and money manager A. Gary Shilling. "I think they are pretty convinced of the need for action. The bond market is telling us the same thing."

In such situations the Fed historically has tended to raise rates "until something happens," such as a slowdown or even recession, said Mr. Shilling, a former Merrill Lynch & Co. chief economist who heads his own firm in Springfield, N.J.

Indeed, bond investors were quick to note that the Fed's words after its last rate hike, on Nov. 16, seemed even stronger than the statement in August that accompanied its declaration of a "neutral" monetary policy stance.

In unusually direct language, the central bank warned that the economy is expanding beyond its "growth potential." Even more bluntly, it said the trend toward a tighter job market "must eventually be contained if inflationary imbalances are to remain in check."

The labor market remains vibrant, according to the latest data. Payrolls rose by 234,000 in November, the Labor Department said last week in its monthly report. That was slightly more than most economists had expected. The unemployment rate remained at 4.1%.

But there was also good news from the Fed's perspective. Hourly earnings rose only 2 cents - half the consensus forecast of business economists. "There is no sign of any acceleration in wage increases," said Ian Shepherdson of High Frequency Economics in Valhalla, N.Y.

Moreover, available labor rose to 9.46 million from 9.36 million, on an unadjusted basis, reversing half the recent declines in the labor pool that had "shocked the Fed," Mr. Shepherdson said. Still, the Fed will need to see several more such reports.

Joel L. Naroff, chief economist for Commerce Bancorp in Cherry Hill, N.J., said he thinks rates could edge higher and that more action from the Fed is likely. "Yes, we can approach 6.50% again" in interest yield on the 30-year Treasury bond, he said, "but no, we can't do that for long. We already have fairly high real [inflation-adjusted] rates."

Others are more confident that the economy's rapid pace will slacken. "Yes, Virginia, there finally will be a soft landing next year," said Wayne M. Ayers, chief economist at FleetBoston Financial Corp., who said he expects no further Fed rate hike.

Fed Governor Laurence H. Meyer was typically noncommittal about prospects for further central bank rate moves. "It depends," he said last week in a speech at New York University.

Mr. Meyer said he views the current economic climate with its low unemployment, low inflation, and high growth as "exceptional but unsustainable." He termed the Fed's Nov. 16 rate hike "still preemptive" against inflationary risks from "robust growth" that threatens to "push already high [labor] utilization rates even higher."

A shift to a more sustainable business environment lies ahead, he said. "The transition might well occur while we remain spectators of an economy that slows spontaneously and as a result of recent policy actions. Or it could involve our more active participation."

Very few economists expect the central bank's monetary policymakers to act at their Dec. 21 meeting, a mere 10 days before the dawn of 2000. Moreover, figuring out the impact of various year-2000 computer issues, such as a buildup of inventories, is likely to keep the Fed on the sidelines until March at the earliest, they say.

Mr. Ayers said he thinks a spontaneous slowdown will be evident by then and that it will be caused by a reversal of the inventory-building now under way. The Fed's previous rate hikes also have cut mortgage refinancings in half, crimping a major source of extra cash for consumers.

But he cautioned that, unless there are "convincing, broad-based signs" early next year that the economy is moving into a lower gear, "the Fed will be on high alert."

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