WHEN Federal Reserve Board chairman Alan Greenspan meets with his fellow Fed governors, he can be calm. Frustratingly calm, say some economists.
They are concerned about the budget turmoil in Washington and signs that the economy may slow if the central bank doesn't nudge it along by lowering the cost of borrowing.
Today, Mr. Greenspan convenes the seventh of the eight gatherings each year of the Federal Open Market Committee (FOMC). Once again, they will take stock of the American economy and determine whether to push down interest rates.
Most experts predict the Fed won't drop rates just yet.
''A wait-and-see attitude prevails at the Federal Reserve,'' says Sung Won Sohn, chief economist of Minneapolis-based Norwest Corporation, a national mortgage and financial services firm.
Though he strongly supports efforts to reach a balanced budget, the Fed chairman has tried to remain politically neutral in the brinkmanship going on between the Clinton administration and Congress over the 1996 budget. Tinkering with monetary policy before a budget is agreed upon could be interpreted as a reward Greenspan has indicated he is not prepared to give until both sides reach an accord designed to shrink the deficit.
''Greenspan wants to stay out of the budget debate. Meanwhile things are quiet on the economic front, with growth advancing at an acceptable pace and inflation under control,'' says Mr. Sohn.
But what is ''an acceptable pace'' to some economists is ''sluggish'' to others who point to a host of troubling signs. October retail sales fell slightly, and September was weak. Jobless claims have posted steady gains in recent weeks. With credit-card debt near record highs and home mortgage defaults up, consumer confidence has fallen a notch.
''The economy has lost its momentum, says Andree-Anne Desmedt, at the Philadelphia-based WEFA Group. ''The question at this point is not whether the Fed will lower rates, but when.'' Assuming budget differences are resolved, she expects the Fed to ease monetary policy at its final meeting of the year, in December.
Barry Bosworth, senior fellow in economics at the Brookings Institution here isn't convinced. The central bank head ''doesn't want to overreact to short term news,'' he says. While Greenspan is concerned about domestic fiscal plans, he is also concerned about the impact of US monetary policy on the international economy. He doesn't expect the Fed to drop rates this year. ''A cut in rates now would amplify troubles in Japan and Europe, where they are trying to get the dollar up against their own currencies.''
The Fed chairman will look closely at the final budget bills to assess the impact and the timing of the reductions in taxes and spending. If the tax cuts are front-loaded to boost to the economy sooner rather than later and spending cuts are back-loaded to delay any drag on the economy, ''the FOMC may wait to cut interest rates,'' Mr. Sohn says. Also important, he adds is ''the reaction of the financial markets to a budget deal.... If stock and bond markets react favorably, Chairman Greenspan is more likely to cut interest rates.''
Other economists awaiting the outcome of the FOMC meeting question whether the Fed is even fulfilling its mandate as manager of the nation's monetary policy.
Dimitri Papadimitriou, director of the Jerome Levy Economic Institute at Bard College in New York, aruges that ''this particular Fed has a monolithic goal to fight inflation. But it is empowered to do more - to look at both price stability and unemployment.''
Indeed the 1978 Congressional Full Employment and Balanced Growth Act - the so-called Humphrey-Hawkins act - gave the Fed four objectives: stable prices, maximum employment, moderate long-term interest rates, and increased production, or economic growth.
''The Fed cannot pursue anything more credibly than the fight against inflation,'' contends Walker Todd, an economist who spent two decades working for the Fed in New York and Cleveland. ''They should ignore all the other objectives because they are more appropriately fiscal policy.'' Better yet, he says, those objectives should be achieved through the free market, not government management of the economy.
No, says Mr. Papadimitriou, the Fed's singular inflation focus actually dampens future prospects. ''Simply chasing a phantom inflation rate does nothing for economic growth or the 7.5 million people who are unemployed. The recent decline in wholesale prices demonstrates that there is no inflation, he says. Economic security doesn't mean zero inflation,'' he adds, ''it means economic growth.''