The suspense over a possible Federal Reserve interest rate increase is likely to go on all summer and perhaps beyond.

Despite the "bias" toward raising rates adopted at their May 18 meeting, Fed policymakers are seen by most economists as still unready to take that step at their next session, June 29 and 30.

"The tactics and timing of any Federal Reserve action remain open," said Allen Sinai, who heads Primark Decision Economics Inc.

He rated the chances of a June rate hike at slightly better than fifty- fifty.

A rate hike would be momentous. It would signal the Fed's judgment that resurgent inflation presented a threat so serious as to call for braking the economy and perhaps ending one of the longest expansions in the nation's history.

Consequences for stocks would probably be profound, with the long bull market endangered and bank stocks in particular sent reeling.

At the same time, the Fed would be taking a different path than any of its major counterparts around the world. Central banks in Europe, Asia, and Latin America are leaning toward easing rates.

A June rate hike is "very unlikely," said Ian Shepherdson of High Frequency Economics, given that the May consumer price index reading, due June 16, is unlikely to justify any action.

Moreover, he said, Fed officials under Alan Greenspan's chairmanship have typically not raised rates without first telegraphing the impending action to both the markets and the public.

The Fed has promoted the notion that "rates will only rise if clear signs of inflationary pressure emerge, no matter how strong economic growth seems to be," he said. "An about-turn right now would be amazing. How could we ever take Fed officials' speeches and well-sourced media reports seriously again?"

A Fed rate hike to fight inflation without plentiful evidence that inflation has broken out would amount to a preemptive strike, a course of action that many economists believe the central bank has abandoned.

But Mr. Sinai disagrees, believing the Fed is already worried about price stability next year and may act early to head off any problem.

He said he thinks Mr. Greenspan suggested as much in a speech on May 6 and in the unusually long (for the Fed) statement after the May 18 policy meeting.

Speaking in Chicago on May 6, Mr. Greenspan said, "Inflationary pressures could reemerge, possibly faster than some currently perceive feasible."

In its statement on May 18, the Fed expressed "concern about the potential for a buildup of inflationary imbalances that could undermine the favorable performance of the economy."

It said the policy committee "recognizes the need to be alert to developments over coming months that might indicate that financial conditions may no longer be consistent with containing inflation."

The phrase "over coming months" in the Fed's communique is important, asserted Mr. Shepherdson. He sees the Fed as in the midst of a gradual shift in policy.

"A passing Martian reading this statement would almost certainly conclude the Fed does not expect to act immediately, or even soon," he said.

In fact, he said, he thinks the Fed will raise rates "but will wait much longer than we thought just a couple of months ago."

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