By John S. McClenahen The big question mark seems to be not whether the Federal Open Market Committee (FOMC) will lower short-term interest rates when it meets at month's end, but by how much. On June 12 the U.S. Commerce Department reported that retail sales rose just 0.1% in May to $308.8 billion. "The much-anticipated post-war bounce in spending remains elusive, and we will have to wait to see how the coming wave of tax relief and mortgage refinancing will influence the consumer" in this year's third quarter, says David A. Rosenberg, Merrill Lynch & Co.'s chief North American economist. Also on Thursday, the U.S. Labor Department said that initial claims for unemployment benefits last week totaled 430,000, some 17,000 fewer than in the previous week. However, both the weekly numbers and the four-week moving average for initial jobless claims remain well above the 400,000 mark , which indicates a continuing sluggish labor market. On Thursday the Labor Department also reported that U.S. import prices fell 0.3% in May after a record 3% decline in April. "The dollar's weakness so far apparently has only damped price declines rather than pushed prices higher," notes Maury Harris, chief U.S. economist at UBS Warburg, New York. Deflation remains a concern. The bottom line is that yesterday's data are consistent with a cut in the influential federal funds target rate when Chairman Alan Greenspan and his 11 colleagues on the FOMC meet June 24-25. Rosenberg believes the odds still favor a 50-basis-point cut in the federal funds target to 0.75%. Meanwhile, UBS Warburg's Harris is looking for a 25-basis-point cut to 1% from the current 1.25%.