By Jon Lansner (OC Register)

Fed meets today and tomorrow, with the the central bankers’ interest-rate statement expected to be released at 11:15 Pacific Time on Wednesday. Just about everybody around town — around the globe, no less — expects no rate action this time around. The guessing game now centers on when the Fed might actually begin to raise rates to fight the latest perceived problem: Inflation. Here’s what some local observers told us they thought Fed boss Ben Bernanke and his crowd may do …

Economist Mark Schniepp of California Forecast: They’ll hold steady. Economy looking more stable than two months ago. Dollar is strengthening, core inflation is reasonable. Raising rates would risk deepening the havoc in housing. When will they raise again? When oil prices are clearly in decline. When mortgage rates are a little lower. When there is less risk that raising rates will produce increases in the indexes that adjust adjustable mortgages. So , not this year.

O.C. Treasurer Chriss Street: The Fed will stand pat on Wednesday. The real economy is already in much worse shape than is being reported and this is early in the down business cycle. The case for raising rates is the obvious piece of the iceberg you can see. Inflation is trending to the 4.5% or higher level. With the discount rate set at the 2% level, that means the real net interest rates are actually “negative” by about 2.5%. Present this to an accountant and the answer is clear that rates need to rise at least 50% of the spread to slow the economy and create enough “slack” to slow the economy down. Unemployment appears to be headed to 6% or higher. This is the big iceberg that you and the Fed should be very afraid of.

UC Irvine real estate professor Kerry Vandell: The Fed will hold steady. Bernanke is between a rock and a hard place: raising rates would help strengthen the dollar and stifle inflationary expectations but would further erode the housing and credit markets and drop us into a recession. Not to mention the impact anything very different from the status quo would have on the election. I do not see rates being raised until the spring, if then … depending on the state of the economy and the beginnings of recovery in the housing market.

Investment adviser Chip Hanlon at Delta Global: I would expect no move, but a change to the Fed’s language making it sound more hawkish toward inflation. And I believe that’s the current plan: speak loudly and carry no stick. At least “Helicopter Ben” has managed to discern that we have a wee bit of an inflation problem, which is a big step in the right direction for him, but I’ll only believe he has the stomach to boost interest rates when I see it. With the biggest investment banks still hemorrhaging and another big “credit crisis” shoe left to drop — in corporate real estate — I suspect Bernanke secretly has his fingers crossed that “jawboning” the U.S. dollar will be enough to bounce it back to respectability.

Investment adviser Eric Steingruebner of Euro Pacific Capital: I think that the Fed leaves rates unchanged at this point. They have really painted themselves into a corner. If they raise rates it will further crush the banks and what’s left of the real estate market, not to mention what it will do to already-strapped consumers overloaded with credit card debt. The Fed also can’t lower rates, because food and energy prices would further skyrocket, and the dollar would fall further and faster. If they do raise rates sometime in the near future, it would only be based on great economic news, and even then, would probably only be a quarter-point raise. They simply can’t “hike” rates at this point.

Lender Aaron Kopelson at Loan Link Financial Services: I believe the Fed will keep the Fed Funds rate at 2%. I believe they want to wait and see what incoming data reports in the six weeks leading up to the next meeting in August. They will keep a very close eye on inflation data. The Fed would very likely start to raise rates at theAugust meeting if inflation begins to runaway.