Fed skipper Alan Greenspan spoke yesterday and the stock market basically yawned. The reason: His key comments in congressional testimony – namely the economy’s on reasonably firm footing, underlying inflation is contained, and there are pockets of froth in some housing markets – are consistent with what he’s said before. What the market wanted, but didn’t get, was a clear indication from the Fed chief that the Fed’s latest tightening cycle was pretty much kaput.

“I think Mr. Greenspan is soft-pedaling the risks,” said Los Angeles day trader Arnold Silver, who believes (and he’s hardly alone) that the risk of inflation is greater than suggested by the Fed chairman.

Meanwhile, here’s an alarming and decidedly contrary bit of crystal-ball gazing from some Fed watchers – the possibility of five more interest-rate hikes before year-end.

That may seem far-fetched, given last Friday’s disclosure of bum employment numbers (notably the May creation of only 78,000 new jobs) and prior hints from the Fed it’s in the eighth inning of tightening. In other words, the consensus is that maybe we’ll get a few more rate hikes this year, but that’s it. What’s more, Merrill Lynch, pointing to the need to avoid a consumer debt serving crunch, is predicting a couple of Fed cuts in early 2006.

In contrast, some Fed watchers argue it’s premature to conclude Mr. Greenspan is ready to roll over and play dead, given a reasonably peppy economy and renewed inflation worries. Included are a few who see a possible hike in the federal funds rate (now 3%) at each of this year’s five remaining Federal Open Market Committee meetings. In brief, they see a rise of 25 basis points at each meeting, with the possibility of some 50-point boosts also tossed in.

Raymond Stahler, who runs the London-based global money manager Stahler Dearborn, told me in March he thought the federal funds rate would wrap up the year at 3.75% to 4% – which is the range many economists have been using for the 2005 close. However, he’s had a change of heart and now believes a year-end wrap-up of 4.25% to 4.75% is more likely. What’s more, he said he wouldn’t be shocked if the rate rose to 5%.

Why so? Because, he reasons, the economy, except for manufacturing, seems to be moving along just fine. Further, he believes inflation is on the rise and “there is no way oil is about to return to the $20s any time soon.” He also thinks the Fed can ill-afford to shut its eyes to the budget and trade deficits, a housing boom accompanied by massive borrowing, the huge consumer debt buildup, and the prospects of renewed weakness in the dollar.

“The market seems oblivious to the interest-rate threat,” he said. “It thinks rates will remain low, falsely reasoning there’s no way the Fed will short-circuit the recovery by pushing rates much higher. “That’s naive thinking,” he believes, “considering that the economy and inflation are both displaying a lot more muscle.”

Since June 2004, the Fed has raised the federal funds rate eight consecutive times. If we see this string expand to 13, as Mr. Stahler suggests, it would represent the second-biggest consecutive run-up in rates in 25 years. The last such sprint took place in the wild inflationary days of 1980, when the federal funds rate – responding to 14 straight increases and market pressures – ballooned that year from 10.85% on September 24 to 19.83% on December 17.

Economist Scott Brown of Raymond James Financial, citing higher-than-expected first-quarter unit labor costs (which pushed the year-over-year increase in wages and benefits to a nearly five-year high) and mounting inflationary pressures, thinks at least three more rate increases, and possibly five, are in the cards this year.