Maury Harris, chief economist at PaineWebber Inc., is expecting the Fed to raise short-term interest rates by another 75 basis points in the first quarter. But he expects a "meaningful slowdown" in real economic growth, to more than the Fed's 2.5% limit, which "should preclude further increases later in the spring.

Writing in Monday's issue of Standard & Poor's Credit Week, he said: "Higher interest rates already are taking their toll on the housing industry, and its 0.4 percentage point-growth contribution will turn slightly negative in 1995."

Mr. Harris noted that about $1 trillion in outstanding overall household borrowing is at adjustable rates and monthly payments will be rising, with a lag, in response to higher short-term interest rates.

"Another dampening effect of higher interest rates on consumption will come via the mortgage refinancing channel," he wrote.

"The savings from the very high levels of mortgage refinancings in 1992 and 1993 helped finance subsequent consumption. However, incremental purchasing power from this source dried up last year as mortgage refinancings plummeted."

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