Federal Reserve officials, confronted with the prospect that a war with Iraq could start within days, are likely to leave their 1.25 percent target unchanged when they meet Tuesday. Most analysts believe the Fed stands ready to cut rates if financial markets react badly to the war. But many of the officials have said they think the major problem plaguing the economy is war uncertainty, and if they are right and all goes well, perhaps the economy will pick up without further rate action. On the other hand, if the problems are more deep-seated and growth does not improve even if the war goes well, they could still move aggressively. Lehman Brothers told its clients last week that, war aside, it expects growth to slow to only about a 1 percent annual rate, triggering Fed cuts totaling 75 basis points during the second quarter, perhaps starting with one before the May meeting.

Tomorrow, Treasury will sell $17 billion each in three- and six-month bills, which yielded 1.12 percent and 1.11 percent, respectively, in when-issued trading Friday. Also tomorrow, Treasury will announce details of an auction of four-week bills to be held Tuesday.

-- John M. Berry