(FORTUNE Magazine) – Predicting what the Federal Reserve will be doing in a few months is always perilous, but a widening consensus of Wall Street economists and market watchers is betting that the Fed will begin raising interest rates sometime in the first half of 2000. That means you can also expect a rising chorus of carping and criticism aimed at the Fed from the easy-money lobby--that permanent collection of pundits, pols, and special-interest pleaders who are always against interest rate increases. The senior member is the AFL-CIO, which sees any rise in interest rates as an attack on the working person. A more important but equally stalwart critic is the National Association of Manufacturers, the trade association of smokestack America, which considers rate increases a threat to capital formation. In fellowship with this odd couple travels a flock of old-fashioned liberals (led by Iowa Senator Tom Harkin) and hidebound supply-side conservatives (notably Steve Forbes, presidential wannabe and editor-in-chief of Forbes).

It's interesting to look back at the last time the Fed raised rates and see what the never-ever crowd was saying then. Guess what. It opposed the rate hikes and warned of impending doom. Just before the Fed raised rates a quarter point in June, the AFL-CIO insisted that an increase was unnecessary. "Working families will pay the price of a mistaken tightening," said the labor group. "The entire nation has a lot to gain--and little to lose--from staying the course." When the Fed again raised rates a notch in August, Steve Forbes prophesied that "the high priests of finance at the Fed...relying on...seat-of-the-pants speculation" could "turn our mighty economy into the economic equivalent of the Titanic." After the Fed again nudged rates up a quarter point in November, the National Association of Manufacturers, in its forecast for 2000, stated, hopefully, "We anticipate that the Federal Reserve will refrain from another rate increase."

All of which, of course, raises some interesting questions, the first of which is, What's happened since? The answer is that the Fed's speculation--however arrived at--has been prescient; its critics dead wrong. Since the summer, we now know, the economy has grown explosively--with real GDP up more than 5% in the third quarter (and probably in the fourth as well) while securities markets boomed. Another question is, Have any of the members of the easy-money lobby ever called for a rate increase? Evidently not. Pressed as to whether he could envision any scenario in which the NAM would favor higher rates, a spokesman allowed that "if there was profoundly rampant inflation...it would be something we would want to evaluate." The only circumstance in which Steve Forbes would support a rate increase, says a spokesman, is "double-digit inflation." Those, of course, are the kinds of intentions that paved the road, back in the late 1960s and early 1970s, for the inflationary outbreaks that ultimately led to the recessions in 1974 and the early 1980s--America's most hellish economic episodes since the Depression.

The reasons to anticipate that the Fed might raise rates this year are straightforward: Overall inflation, while low at about 2.5%, has been rising. Energy prices have risen sharply, and other commodity prices, long quiescent, have begun to rise as well. Wages are also increasing faster, at a 3.6% rate, than in recent years.

But that's what has been and is happening now, not what's about to happen, which is why making sweeping pronouncements about future Fed policy is such a futile occupation. Anyone who proposes to tell the Fed what to do in the future is making--explicitly or implicitly--an economic forecast. Alan Greenspan, one of the pioneering forecasters of the modern era, knows this well, and it's one reason he's always loath to answer hypothetical questions. His modus operandi is to wait till the last moment to act, and then only after he's weighed the very latest data that flow into the Fed's gigantic info-maw. One of his pet maxims is "The best forecast is made with the freshest data." If the economy changes, so will his views.

Greenspan has been running monetary policy now for more than a decade, and it's hard to find serious fault with his performance, especially in the past several years, as President Clinton acknowledged in January by renominating him to a fourth four-year term. So if the Fed nudges rates higher, don't panic: Give Greenspan the benefit of the doubt.

Remember, by doing so you'll be betting on a forecast. But if you have to bet, where do you want to put your money: with the AFL-CIO? The NAM? Steve Forbes?

Or with Alan Greenspan?

REPORTER ASSOCIATE Jane Folpe