The Fed plays the tune, and the rest of the world's central banks hum along.

On Monday 08:30 New York time, an hour before the Wall Street bell rang again, the Federal Reserve Board cut interest rates by 50 basis points. Central banks elsewhere faithfully coordinated their rates. What about Israel?

This coming Monday is the last Monday of the month, the time the Bank of Israel traditionally announces lending rates for the following month. Will it too lower rates for October?

If it's good for the euro bloc, Britain, Denmark, Switzerland, Hong Kong and Taiwan, to name but a few, wouldn't it be good for Israel too?

Is our economy growing like a weed while their economies wither? Is employment here satisfactory? Is the Israeli economy really so special, or is our central bank governor totally detached?

First we should ask why the Fed lowered interest rates. To sum up its announcement, it said that due to the tragic circumstances, it had decided to grant growth greater priority than price stability.

Preferring growth over stable prices, for however short a term, challenges the Bank of Israel's tradition.

The Israeli and American economies have factors in common. Both are sinking into recession, both are plagued with unemployment (it's worse here).

But there are also striking differences between the two economies, most immediately in that hijacked passenger planes did not crash into at the heart of Israel's business world. More generally, unlike Israel's habit of centralization, the American economy is wide open.

In Israel, changes in the currency market immediately affect price stability. Since rate changes affect the currency market, Israeli rate cuts sharply and quickly affect local prices.

Here's another difference: The main force driving the U.S. engine is private consumption. In Israel, it's exports. In 2000, export soared to new heights, only to slump badly together with the hi-tech industry this year.

Also, U.S. prices have been stable for years. Stable prices are a fundamental American working assumption. But price stability is relatively new here.

As for the countries that followed the U.S. example, most have also enjoyed stable prices for years, and are economically more powerful than Israel. Generally, their economies are even more open than that of the U.S., but more closed than Israel's. European countries trade chiefly with each other.

In light of all the above, the Bank of Israel does not have much wiggle room to lower interest rates, especially as the treasury has based its policies on optimistic growth forecasts extremely unlikely to materialize.

If the Bank of Israel cuts interest rates, it runs a real risk of missing inflation targets.

This year is pretty much in the pocket: Inflation for the 12 months ended in August was 1.7%, well below the 2.5% to 3.5% target set for 2001.

The target for 2002, 2% to 3%, is already in the red alarm zone, as inflation expectations have risen to 3.2%, going by bond returns.

It's true that financial markets are not operating under ideal conditions right now. There's a lot of background noise that makes sensible predictions ever harder to formulate. But the dynamic picture taking shape is that of rising inflation expectations and a weakening shekel, and that was true even before the terror attacks on the U.S.

Even though the Fed lowered rates eight times this year, and that short-term real interest is negative, the U.S. economy is still sinking into a recession after a decade of growth.

If the Bank of Israel prefers to maintain stable prices rather than encourage growth, it may even boost interest rates, not lower then further.