At closed-door meetings yesterday and today, top Federal Reserve officials are mapping a monetary strategy for the early weeks of the new year. Analysts expect the resulting Fed policy will either be unchanged or will include only slightly tighter credit.
''There probably will be a slight tilting toward restraint, but it will be very subtle,'' says Robert Schwartz, a financial economist at Merrill Lynch, Pierce, Fenner & Smith. He does not expect more than a 0.25 percent rise in the federal-funds rate, the price banks charge each other for overnight use of money.
Others predict that the Federal Open Market Committee, the Fed's policy-setting panel, will keep monetary policy largely unchanged. ''I don't see them tightening further than they have at this point. I do expect them to maintain the same degree of retraint,'' says Harold C. Nathan, vice-president and chief financial economist at Wells Fargo Bank in San Francisco. He notes that in recent weeks the Fed seems to have tightened up on the banking system, and so far this quarter, M-1, a money-supply measure that includes currency in circulation and checking accounts, has grown less than 2 percent.
For the consumer, the current monetary policy outlook means that ''if you are going to buy a house and have found a reasonable interest rate, don't wait for lower rates,'' says Bernard M. Markstein III, senior financial economist at Chase Econometrics, a forecasting firm. On the other hand, a sharp, short-term run-up in interest rates is not expected.
The small interest-rate increase some analysts expect also will hit individuals by dampening sales - and thus employment opportunities - in especially interest-sensitive industries like housing and autos.
Drastic monetary policy changes are unlikely ''because the Fed is going into an election year and does not want a policy causing an inflationary surge or a recession,'' notes Paul W. Boltz, vice-president and financial economist at T. Rowe Price Associates Inc.
A sharp increase in interest rates also could add to the international debt crisis by making it more difficult for debtor nations to cover the interest cost on their debts.