A Fed pause is in the bag: This is a comment I must have heard a half-dozen dozen times during the weekend from various economists, traders, and money managers speculating on the Federal Reserve’s next step — and notably its reaction tomorrow to Friday’s disclosure of another disappointing jobs report.

Well, not everyone agrees with this sentiment, although the overwhelming view is that tomorrow’s meeting of the Fed’s Federal Open Market Committee will finally produce a long-awaited pause following the initiation of 17 consecutive interest hikes since June 2004, which have driven up the federal funds rate to its current 5.25%.

In total, last month produced a lower-than-expected 113,000 new jobs — 140,000 to 150,000 jobs were forecast — while the unemployment rate jumped to 4.8%, from 4.6% in June.

“That jobs data is a clincher,” a Raymond James Financial economist, Scott Brown, tells me. “It puts the Fed in a tough spot. The market now anticipates a pause. It will be shocked if it doesn’t get it, which means stock prices will tumble.”

A Los Angeles-based money manager, Tom Postin, agrees. Mr. Postin, a principal of P&W Partners, reckons the Dow will plunge between 100 and 200 points absent a pause. “I’m not sure we’ll get one, but there’ll be hell to pay if we don’t,” he says. If there is one, he looks for a rise in the Dow of more than 100 points on the theory that many investors will then conclude that the Fed’s tightening cycle is history.

Mr. Brown, though, fears that such a view could be an erroneous assumption, arguing that contrary to comments from Fed officials about being “nearly done,” a pause tomorrow would not necessarily mean an end to the string of rate increases in the current cycle. The market’s view, he says, may be wishful thinking.

Why so? Because, he argues, “the increase in core inflation is a serious worry, as is the decline in the housing market.”

Aside from the tempo of economic activity, the Fed’s perceived vigor of inflation will have a major voice in determining the future course of interest rates. There’s a wide split in the economic community, though, on the current perception of inflation.

This can be seen in the conflicting views expressed by economists Lakshman Achuthan and MarkVitner.

A managing director of the Economic Cycle Research Institute, Mr. Achuthan, departing from his economic bretheren, says, “A Fed pause tomorrow is by no means in the bag.” His reasoning: Underlying inflation pressures, while they’re not running out of control, remain elevated. Pointing to such key drivers of inflation as fiscal stimulus, the action in currencies, capacity utilization, and energy prices, Mr. Achuthan says that when you put them all together, inflation is clearly not receding strongly.

He said there’s a delicate balancing act between inflation and growth, and more to determining the course of interest rates than just factoring in the latest jobs report. In particular, he takes note of the inflation implications of global growth, which has risen three years running and is continuing strong. Summing up his concerns on this front, Mr. Achuthan contends that “it’s just too early to disregard the inflation threat going forward.”

Mr. Vitner, who plies his economic trade at Wachovia Securities, rebuts such thinking, arguing that the economy has slowed to the point where any lingering inflation pressures should definitely begin to moderate. Further, he points out, any new rate hike — which he doesn’t expect — would not significantly curb inflation, but rather increase the odds that economic growth will further stall.

Not only does Mr. Vitner expect the Fed to pause tomorrow, but he thinks there will be no more rate increases the remainder of this year — period. Likewise, he thinks next year will see the Fed funds wind up at its current 5.25% rate.

Given his expectation of a pause, the economist sees a fairly decent market rally, but he says it will be tempered by election year uncertainties.

Meanwhile, an obvious question: With the consensus outlook calling for a pause, how come the major market averages (Dow, S&P 500, and Nasdaq) all closed lower Friday?

Perhaps a good part of the answer can be found in the Street’s expectation of slowing economic and earnings trends. Wachovia’s outlook supports such thinking, with the firm projecting economic growth of 3.2% this year and 2.7% next year. In terms of earnings, the firm expects growth of 15% in 2006, 9.5% in 2007, and 8.7% in 2008.

While the widely expected pause may indeed occur, one obvious reason for some skepticism could be found in a comment made by the Earl of Rascommon, Wentworth Dillon, in the 1600s: The multitude is always in the wrong. Part and parcel of this, loads of economists have been doggedly predicting the end of the credit tightening — which is always a super-contrary indicator — for the past four months.