Fed Seeks to Be `Nimble' as Spending, Housing Signs Diverge

The Federal Reserve, with consumer spending and housing figures sending conflicting signals, is likely to reduce interest rates today while leaving itself leeway either to take back the move or cut more.

Since the Fed met Sept. 18, new reports have shown higher retail sales, record exports and a further slump in home-buying. Chairman Ben S. Bernanke and his colleagues, who this month have repeatedly stressed ``uncertainty'' in the economic outlook, will probably cite risks of both slower growth and higher inflation in today's statement, Fed watchers said.

``They've got to leave it open on both sides and see how the economy moves along,'' said Thomas Garcia, head of trading in Santa Fe, New Mexico, at Thornburg Investment Management, which oversees $50 billion. ``Regardless of whether they do cut rates, they definitely have to have language that says, `If we start to see inflation pick up, we can still raise rates.'''

Ninety-one of the 108 economists surveyed by Bloomberg News forecast a quarter-point reduction in the target rate for overnight loans between banks, to 4.5 percent. Fourteen predict no change and three expect a half-point reduction.

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