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POLICYMAKERS LEAVE INTEREST RATES ALONE

Faced with conflicting economic data, Federal Reserve policymakers decided Tuesday to leave interest rates unchanged.

After meeting privately for more than four hours, the Federal Open Market Committee adjourned without making any change.Fed spokesman Joseph R. Coyne said that the meeting had adjourned and that there would be no announcement - a signal that Fed policymakers had left rates unchanged.

Before the meeting private analysts had widely expected rates to remain untouched.

"The Fed's instinct is to wait and see," said economist David Jones of Aubrey G. Lanston & Co., a New York government securities firm. "There is no sense of urgency to make any policy shift."

Like most other analysts, Jones had predicted the FOMC would not act until more definitive evidence of the economy's direction is available.

The FOMC is composed of the Fed governors in Washington and five of the 12 regional bank presidents.

After cutting the federal funds rate last July and again in December and January to stimulate economic growth, the committee decided in March to hold rates steady as signs of a moderately rebounding economy emerged.

The federal funds rate, the central bank's target for overnight loans by commercial banks, has been at 5.25 percent since Jan. 31.

In a survey of regional conditions last month, the Fed concluded the economy continued to grow moderately with few signs of inflation.

Since then, signals have been mixed.

For instance, there have been spotty signs of weakness, including continued sluggishness in the manufacturing sector. But at the same time, housing activity remains at a high level despite rising mortgage rates.

Still, some prices have been rising recently, notably for energy and some food products. There also have been reports of wage pressures where tight labor markets exist. The unemployment rate in April was just 5.4 percent, lowest in more than a year.

Many analysts believe, however, that most price increases will be short-lived, due to one-time factors such as a severe winter that fed demand for heating products.

Economists at Laurence H. Meyer & Associates, a St. Louis forecasting service, said in their monthly newsletter that the Fed probably would delay any action "until it sees several more months of data untainted by the unusual events of the first quarter."

The Fed might move to raise rates if "recent evidence of accelerating wages develops into a trend," the economists said. "The chances of more restrictive policy have increased in the last several weeks," the economists noted, "but, thus far, we feel conditions do not warrant a tightening."

Jones of Aubrey Lanston agreed, saying the FOMC probably would not change rates until the August or September meetings at the soonest and possibly not until after the Nov. 5 presidential election.

"I think the Fed is very comfortable with where things are right now," Jones said. "They are watching the spurt in energy prices closely but so far those increases haven't spread to other sectors of the economy."

But economist Marilyn Schaja of Donaldson, Lufkin & Jenrette Securities Corp. said the central bank likely will shift its concern in the second half of the year to economic growth, which she sees easing sharply.