A New Interest Rate Cut May Come, Some Experts Say : Commerce: If the Fed’s reduction this month fails to energize parts of the economy, another may be seen by year’s end.

Just when you thought interest rates were scraping bottom, speculation is building that the central bank has another ease up its sleeve.

The Federal Reserve had hoped that the cheaper borrowing costs it instituted this month would get consumers and businesses spending again.

It was the eighth lowering of the Fed’s benchmark discount rate since the economy began stumbling in early 1989. But some economists say that even the lowest interest rates in nearly three decades may not be enough to energize parts of the economy.

“The bottom line is, if money growth continues to expand below targets, and we don’t see any revival in the labor force or production or income growth, the Fed will ease again,” said William Sullivan, director of money market research for Dean Witter Reynolds Inc.

It wasn’t but six months ago that bond market participants were branded gamblers for predicting a similar scenario. The Fed in December had pushed down interest rates to their lowest levels in a generation, hoping to inspire a more vigorous recovery.

Early spring signs of an economic turnaround, including rising housing starts spurred by enticingly low mortgage rates, initially seemed to fulfill that hope.

However, the recovery in housing starts proved short-lived as other elements of the economy, such as employment and retail sales, stumbled. The Commerce Department reported last Thursday that housing starts fell 3.2% in June.

Now, some economists warn that the Fed’s latest easing may prove as temporary a balm as the last.

The Fed’s one-half percentage point cut in the discount rate to 3% on July 2 persuaded many banks to push mortgage rates to their lowest level in 19 years. This has spurred hopes of a recovery in housing--but they could be dashed by persistent weakness in the overall economy.

Behind the view that there may be another easing is anemic growth in the nation’s money supply. Even though figures released Thursday showed improvement for early July, some economists dismissed the money supply growth as a technical aberration. Others said it was fueled partly by homeowners rushing to refinance mortgages to capitalize on cheaper interest rates.

Adding to uncertainty is a recent sharp increase in unemployment and lackluster retail sales.

Nancy Kimelman, chief economist for Technical Data in Boston, said the government bond market already has begun pricing in a one-quarter percentage point drop--to 3%--in the federal funds rate. That is the interest that banks charge each other for overnight loans.

Sullivan thinks there is a 50-50 chance of another cut in the funds rate after Labor Day.