Alarmed by signs that the U.S. economy is overheating, the U.S. Federal Reserve Board this week raised U.S. interest rates by half a percentage point. The move reflects a shift in sentiment at the U.S. central bank. While the bank's top officials appear to have accepted the idea that information technologies have transformed the U.S. economy, inflation fears are once again resurgent. The concern now is ensuring that the economy can be slowed without crashing. It promises to be a high-wire act.

The U.S. economy continues to blaze ahead. It is currently in its 109th consecutive month of growth, a record for the postwar era. Gross domestic product expanded at an annual rate of 5.4 percent in the first quarter. Unemployment has reached a 30-year low of 3.9 percent, industrial production is up 6.1 percent over a year ago, and operating capacity is just above 82 percent. Prices are edging upward, although the consumer price index was virtually flat in April.

While close scrutiny of the numbers suggests that there might still be room for noninflationary growth -- most economists believe that 84 percent capacity is the point at which demand outstrips supply and prices rise -- the Fed is taking no chances. The problem is that its margin for maneuver is shrinking.