"We don't see the Fed making an aggressive move, just another gradual snugging," he said.

He said this "slight snugging" was the result of heavy recent selling of the dollar.

The most probable outcome, he said, "is a bounce-back in the fourth quarter that will bring the Fed back to the fore and an eventual snugging of interest rates."

In late April the Fed acknowledged a "slight snugging" of monetary policy, but analysts have been uncertain about how much the closely watched overnight funds rate would increase.

"This ever-so slight snugging and the fact that Treasury Secretary Baker is no longer talking the dollar down may be helpful," Mr. Sullivan said.

And he'd best turn his mind to that, too, he thought, snugging the buckics of his kilt at waist and hip, and reaching for the long woolen stock.

There have been reports that the decision to tighten, which Mr. Volcker termed a "slight snugging," was made during an emergency telephone conference on April 29 although the Fed minutes make no mention of such a conference call.

Uncertainty on Fed's Move In the United States, the chairman of the Federal Reserve Board, Paul A. Volcker, confirmed a "slight snugging" of monetary policy - in other words, nudging interest rates higher.

"There is speculation in the market that the Fed will eventually ease its policy stance, or at least reverse the snugging moves it took in April," said David Jones, chief economist at Aubrey G. Lanston & Company, a primary Government securities dealer.

A continuing shortening of portfolio maturities by institutional investors last week raised prices and pulled down yields on the shorter Treasury notes, and the perceived snugging -or slight tightening - of short-term rates by the Federal Reserve sent Treasury bill rates tumbling.

But Mrs. Ramirez pointed out, as did other credit market analysts last week, that "aside from a possible slight snugging of short-term rates by the Fed, there is little evidence to be found in the recent flow of economic statistics to justify more than a modest rise in inflation later this year."