If there is a good rule of thumb about the Federal Reserve Board, it is this: A startling economic report is not enough to sway policy.
When the Labor Department reported on Friday that employment surged by 337,000 jobs in October, far faster than most forecasters had expected, market speculators immediately raised their bets that the Federal Reserve would not pause in its course of gradually raising interest rates.
Fed officials have left no doubt that they will raise short-term rates tomorrow by a quarter point, to 2 percent, but they are still keeping their options open for December and next year.
By most measures, the Federal Reserve is less than halfway through a course of gradually "normalizing" short-term interest rates from the rock-bottom level of 1 percent earlier this year.
Even if the central bank announces another rate increase tomorrow, as most analysts expect, "real" short-term rates will still be slightly below zero after the effect of inflation is subtracted.
Historically, the real federal funds rate, the rate charged on overnight loans between banks, has averaged about 3 percentage points above the inflation rate. While Fed officials have warned that there are no clear rules for a neutral or normal rate, they have made it clear that today's rates are low enough to aggravate inflation if left unchanged.
The question is how fast the rate increases should occur and whether, after four rate boosts from June through November, the central bank can pause next month or next spring while it assesses the strength of the economy.
Laurence Meyer, a former Fed governor and now head of Macroeconomic Advisers, a forecasting company, said Fed Chairman Alan Greenspan was essentially on autopilot until the overnight rates climbed to 2 percent.
For now, Meyer said, officials have room to moderate the pace of additional rate increases in response to signs of slowing growth or faster inflation.