Within the next two weeks, December 14 to be precise – the date of the next Federal Open Market Committee meeting – we’ll all get a telling clue as to whether Alan Greenspan & Co. will be a tiger or a mouse on the interest-rate front in the year ahead.

The general view – though some rate bears are aggressively challenging it – seems to be that a mouse is the more appropriate designation, although Federal Fund contracts suggest about an 80% chance of another rate boost at the FOMC session.

One of the chief arguments of the Street’s bullish contingency is that interest rates are no big threat, given their low levels. Likewise, there’s a widely held view that rates are not likely to balloon, the theory being that the Fed is not about to abort the economic recovery at this early stage of the rebound. Many trackers of the financial markets are convinced that the trio of rate hikes we’ve seen since June are it for the year.

However, judging from Mr. Greenspan’s own words, rates are not only not on hold, but they could be headed higher than most of us think – which is hardly sanguine for the stock market. Responding to a recent question by Josef Ackerman, chief executive of Deutsche Bank AG, the Fed skipper declared: “Rising interest rates have been advertised for so long and in so many places that anyone who has not appropriately hedged his position by now obviously is desirous of losing money.”

“Wow!” responds John Silvia, the chief economist at Wachovia Corp., the Charlotte, N.C.-based banking biggie. It’s another signal, he believes, that the rise in interest rates is apt to top Wall Street expectations. In general, the financial markets expect the Fed to boost the Federal Funds rate by another 125 to 150 basis points over the next 12 months, placing the Fed Funds rate at 3% to 3.25% at around yearend 2005. That’s too low, according to Mr. Silvia, who had originally pegged the rate at 3.5% by the end of next year. He has now hiked his forecast to around 4%.

“We continue to believe the rate risks are to the upside,” Mr. Silvia said, particularly, he added, “if we are going to see an adjustment in the nation’s current account deficit and halt the dollar’s slide.

He points out that the Fed has nine FOMC meetings between now and the end of 2005. If it were to raise the Fed Funds rate by a quarter of a percent at each meeting, that would put the rate at 4.25% at yearend 2005. Mr. Silvia believes there’s still a chance the Fed will opt to skip a meeting or two. But he also thinks there’s a chance the Fed will turn even more aggressive.

“With the economy growing solidly, inflation climbing, and the Fed getting edgy about the current account deficit, we would err on the side of a more aggressive Fed than a more complacent one,” he said.

The most ominous note on rates comes from economist J.C. Spender, professor of business strategy at the Open University Business School on the outskirts of London, Europe’s largest business school. His outlook: “U.S. interest rates will go through the roof because of the catastrophic budget and trade deficits that have to be funded with overseas money.” He also predicts that the ailing dollar – which has been plunging to new lows against the euro – will drift even lower over the next three to six months “because the U.S. economy is being managed so badly” and he figures the Fed will surely be influenced to push rates a lot higher to defend the dollar.

How high is up? I asked. “Whatever it takes to draw overseas money into the U.S.,” he snapped back.

While the pros I talked to are divided on whether the Fed will go again or take a pass on a rate hike at the December 14 FOMC meeting, Sharon Stark, the chief fixed-income strategist at Legg Mason, thinks a rate boost is almost a foregone conclusion, as indicated by the Fed Funds contracts.

Merrill Lynch’s chief North American economist, David Rosenberg, disagrees. He’s of the view that the Fed will not raise rates this month. His contention is that there’s too much economic data to be released between now and the FOMC meeting to justify such high odds in favor of a hike.

Meanwhile, the Fed has said its policy remains “accommodative.” Maybe so, but money manager Leonard Mohr of Los Angeles-based MCR Associates has his doubts and thinks “the market is blindly ignoring interest rate risks.” Given the swelling budget deficit, the weak dollar and a strengthening, but not roaring economy, he sees the Fed Funds rate climbing to 4.5% to 5% by the end of next year.

Everyone knows higher rates are a bummer for the stock market, but investors, including the professionals, he notes, seem to be in total denial about such a possibility. “That’s a dangerous denial,” he said.