FED MAY LOSE VOICE FOR LOWER RATES\Central bank deputy Blinder to quit, to return to Princeton, reports\say.

Byline: Louis Uchitelle The New York Times

Alan S. Blinder has told the White House that he will leave as vice chairman of the Federal Reserve when his term ends in two weeks, Fed officials reported Tuesday.

Blinder, who was named to the Fed in June 1994, has been the chief voice within the nation's central bank for lowering interest rates to stimulate the economy. His departure comes at a moment when the economy appears to be weakening.

The Fed's control of short-term interest rates gives it powerful leverage to try to stem any such weakness, which could become an issue in this election year.

The letter announcing Blinder's decision, sent to the White House on Tuesday, put an end to speculation that President Clinton might try to keep Blinder in place as the administration's most influential appointee to the Federal Reserve.

Blinder, a widely respected academic economist from Princeton University, was Clinton's first appointee to the Federal Reserve's seven-member board of governors. There was some speculation at the time that Blinder, who served on the White House's Council of Economic Advisers in 1993 and early 1994, eventually would be the president's choice to replace Alan Greenspan as chairman. Greenspan's current term ends in March.

The Republican congressional victory in 1994 put an end to White House hopes that Blinder - often thought of on Wall Street as too willing to tolerate some inflation to keep the economy growing - could ever gain Senate approval to replace Greenspan.

Recently, however, administration officials had considered asking the Republican Senate to approve Blinder's reappointment as vice chairman, as part of a package deal that would give Greenspan another term as chairman.

Blinder is expected to announce his departure Wednesday. A White House spokeswoman would not comment, saying it was up to Blinder to make public any announcement that he is leaving the Fed at month's end.

Wall Street, which traditionally prefers strong anti-inflationary policies from the Fed, is expected to be glad to see Blinder leave. "The constituency for easy money - low rates - at the Fed has just lost one of its most outspoken champions," said Stephen Roach, chief economist at Morgan Stanley & Co.

In his letter, Blinder, who is 50, is said to have told Clinton that he must return to Princeton at the end of this month, when his Federal Reserve term expires. By failing to return, he risks losing his tenured position as an economics professor.