A light hand at the tiller

INTEREST rates in the United States, if anyone has failed to notice, appear to be on an upward escalator. And where the turbulent stock market of recent days will settle out is unknown. Precisely because of the uncertainties on Wall Street - and over the long-range momentum of the economy - Washington policymakers should not overreact. They should keep, instead, a light hand on the economic tiller. This week's increase in interest rates needs to be put into perspective. Yes, major banks have boosted their prime rate a half point, to 9.25 percent. And yes, for millions of consumers, that will mean higher charges on adjustable-rate mortgages, credit cards, and home-equity loans. But that upward movement by itself, which had been expected, does not necessarily spell the end of the current bull market, nor suggest a recession anytime soon.

The rate increase reflects expectations of higher rates abroad (in West Germany and Japan) as well as inflation concerns at home, now that the economy is apparently posting fairly solid growth with relatively low (5.9 percent) unemployment.

The overall economy continues to look good, as is underscored by gains in purchasing orders and employment. Usually when an economy turns downward there is a period - often months long - of tepid growth. The US economy is not now in that situation.

Policymakers at the Federal Reserve Board, the Treasury, and the White House will want to keep their eyes on the numbers during the weeks ahead. Economist Milton Friedman says money-supply growth is too low and, unless increased, could trigger a recession next year. Is he right? Or should the Fed tighten credit somewhat more (as it may well do), to slow economic growth to allay concern about inflation?

The important point is that overreaction needs to be avoided. Some waiting - and careful watching - seem best for now.