Washington ? Conflicting economic risks that could emerge from Hurricane Katrina are putting Federal Reserve Chairman Alan Greenspan and his central bank colleagues in a challenging spot.

Fallout from the disaster is expected to slow economic growth over the rest of the year, perhaps persuading the Fed to suspend its campaign of raising interest rates.

But a main argument for the Fed to stay the course is the concern that high energy costs, made worse by the killer storm, could filter down and affect the price of all kinds of things. Broader inflation could follow.

Policy-makers meet Tuesday to consider their next move on interest rates. Many economists are betting they will lift an important short-term benchmark by one-quarter of percentage point, to 3.75 percent.

It would be the 11th such increase since the Fed began to tighten credit in June 2004.

Commercial banks would be expected to increase their prime lending rates by a corresponding amount, to 6.75 percent. These rates are used for many short-term consumer loans, including some credit cards and popular home equity lines of credit.

If the Fed pushes rates up again this week, borrowing costs would reach their highest level in four years.