WASHINGTON -- A moderate consumer price report for June that the government issued yesterday may have bought a little time for the Federal Reserve before it tightens credit again.

Many analysts now believe that members of the Federal Open Market Committee will wait until their Aug. 16 meeting. before considering another increase in short-term rates. Some are betting the Fed will raise the federal funds rate half a percentage point to 4.75% from the current 4.25%, while others say officials will opt for the usual medicine of only 25 basis points.

Their comments came after the Labor Department reported that its consumer price index last month rose 0.3%, as did the core index for prices excluding food and energy. Compared with a year earlier, the CPI was up 2.5% while the core rate rose 2.9%.

The figures were in line with bond market expectations and provided further reassurance that inflation remains in check following Tuesday's report that the producer price index in June was fiat. The market also calmed as the dollar steadied in foreign exchange markets.

"While we still expect inflation to worsen, it has not done so yet -- at least as measured by the PPI and the CPI. This week's reports have bought some time -- probably a month -- for the Fed," said Sally Kleinman, a money market economist with Chemical Securities Inc.

Richard Rippe, chief economist for Prudential Securities, called the CPI report "further confirmation that we've got a relatively stable consumer price environment."

Rippe said he was encouraged by a continuing moderation in prices of services, which rose only 0.2% in June and were up 3.2% compared with a year earlier. Services include prices paid for housing, entertainment, and health care, and account for a large chunk of the CPI statistics.

"What you're getting in the CPI is essentially a stable pattern with goods moving up a little while services are slowing," said Rippe. "The Fed will accept this report without feeling a need to make a monetary policy move right away."

Despite the continuing stream of low inflation numbers, analysts say Fed officials believe the economy is growing too quickly and remain committed to raising rates to head off inflation. "The actual inflation numbers are unbelievably good, but it's the anticipation of inflation that is moving the markets," said David Lereah, chief economist for the Mortgage Bankers Association.

Lereah expects FOMC members to raise the federal funds rate half a percentage point to 4.75% when they meet in August after more evidence of a robust economy is released, including the July employment report. "The Fed cannot let this economy go at a 3% or greater clip with a 6% unemployment rate for any extended period of time without applying upward pressure on rates," Lereah said.

While consumer spending slowed during the spring, analysts say they believe the economy still grew around 3% -- which would not be much of a slowdown from 3.4% in the first quarter. Many economists are projecting growth of 3% to 4% in the third quarter, Lereah said.

For the first six months of the year, consumer prices rose at an annual rate of 2.5%, marking a continuing deceleration from 2.7% in 1993, 2.9% in 1992, 3.1% in 1991, and 6.1% in 1990. The core rate rose during the fast half at an annual rate of 3.0%, also a continuing improvement over the previous four years.

However, Robert Brusca, chief economist for Nikko Securities Company International, said some aspects of the June price report were troubling. He attributed much of the modest 0.3% gain to an unusually small gain of 0.1% in housing costs, which make up about 40% of the total index. He also noted that clothing and apparel costs both jumped 0.6%.

"I don't think these numbers look that good," said Brusca, adding that he believes Fed officials will want to raise rates before next Wednesday, when Fed Chairman Alan Greenspan is scheduled to testify to Congress.

"If you go into Humphrey-Hawkins and say you're basically all done and then you turn around a couple weeks later and raise rates, they're going to be after blood," said Brusca. "It's much better for the Fed to take the heat at the hearing."

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