Fed Expected to Hike Interest Rates Again : Economy: Analysts say inflationary pressures may force move as early as May. Latest action came Feb. 4, the first time in five years.

NEW YORK — The Federal Reserve is expected to keep up its guard against inflationary pressures and may raise interest rates again as soon as next month, economists said Friday.

The Fed tightened credit for the first time in five years Feb. 4 and raised interest rates again in March, making clear it wanted to stamp out any threat of inflation before prices started creeping up.

The policy-making Federal Open Market Committee is set to meet again May 17--the trigger date, analysts said, for the next round of higher rates.

“I think a good guess would be that it will happen after the May 17 (Federal Open Market Committee) meeting. That seems to be the trend,” said Ray Stone, economist at Stone & McCarthy Research Associates.

“I don’t think the next Fed tightening will be the last. It seems there will be another,” Stone said.

“We think the Fed will probably continue to tighten for a while.”

The New York Times reported Friday that the Fed was again signaling that interest rates would move higher, since low short-term rates have already encouraged too much lending.

The aim of the policy, the newspaper said, was to make the economy grow at its fastest-possible pace without feeding inflation.

The White House has argued strongly, however, that there is no current inflationary threat.

In an opinion piece in the New York Times, Laura D’Andrea Tyson, chairwoman of the Council of Economic Advisers, wrote that financial markets were reacting more to myths than to realities when it came to inflation.

Already, however, tighter credit has lifted rates on business loans and home mortgages, beginning the gradual process of dampening demand for money and crimping back on economic growth.

Though the most recent inflation reports were viewed as benign, economists said there is still a threat of potential price pressures.

The Labor Department reported on Wednesday that consumer prices advanced just 0.3 percent in March.

In a sign the economy is still steaming ahead, the Fed said Friday that factories operated at their busiest pace in nearly five years during March and manufacturing output grew for a 10th straight month.

“The data offer continued evidence that the industrial sector is doing quite well and that capacity use continues to trend upwards,” said Dana Johnson, head of market analysis at First Chicago Capital Markets.

The prospect is that the continued surge in the economy will force the Fed to take action again.