Amid all the concern earlier this week that the Federal Reserve might raise interest rates for the third time this year, some think the central bank is actually being too lenient and risking an outbreak of inflation.

Monetary economists, who believe that the money supply is the decisive factor in controlling inflation and moderating the business cycle, insist that the nation's money supply has been growing too fast. It recently has been growing at a 9% rate on a year-over-year basis, compared with 3% in 1995-96. They argue that short-term rates ideally should be several notches higher than they are now.

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