FED DISCUSSION

The Fed may pause in its steady upward path of interest rate hikes, but investors shouldn't confuse a pause with an end of the tightening cycle, economists said.

After digesting two days of testimony of Fed chief Ben Bernanke and the minutes of the Fed's June 29-30 meeting, "uncertainty" is the watch-word of the day.

Bernanke's testimony was straight down the middle between a pause and a rate hike in August. He tried to keep all options on the table.

Financial markets celebrated the possible pause on Wednesday, although the enthusiasm didn't last for more than a day.

"Certainly the Fed wants to pause. And it appears that the market wants the Fed to pause too,"

"whether the FOMC pauses at its next meeting on Aug. 8 is a close call at the moment, with upcoming second-quarter [gross domestic product] and July employment data perhaps tipping the balance."

In the summary of the FOMC's meeting, the committee members said they wanted to send the message to markets their policy actions at future meetings "was not foreordained."

Economists seem as divided on the outlook as the Fed policy-makers themselves.

The majority of economists surveyed predict the Fed will raise rates one more time this year, leaving the fed funds rate at 5.50% at the end of the year