Although most short-term interest rates are already at or near the record levels reached during the credit crunch of 1974, many analysts believe they will rise further.

That could mean a rise in the bank prime lending rate, which is at its 1974 peak of 12 percent, to 12.5 percent within a few months.

Lawrence Kudlow, chief economist for Bear Stearns and Co., said other short-term interest rates, including those controlled by the Federal Reserve Board, could rise at least another percentage point by October or November.

Most analysts think that continued strong business loan demand, an inflation rate that shows little signs of slowing, and exceptionally strong growth in the money supply will force the Federal Reserve to adopt an even more stringent monetary policy.

The pressures on interest rates "will be there for some time to come," observed Richard S. Peterson, chief economist for Chicago's Continental Illinois National Bank.

However, Peterson noted, the Fed could reverse itself if the economy should go into a sudden tailspin. Furthermore, if there were a sharp recession, businesses would slow their borrowing substantially and in turn that decrease in demand would take pressure off interest rates.

While economic output tumbled during the second quarter of the year, the economy has stabilized in recent months and the latest statistics suggest that while the economy is not strong the recession has been a mild one so far.

Heavy loan demand on the part of businesses has been a key reason why interest rates keep rising. In order to satisfy loan requests from their customers, banks have been borrowing large amounts of money on the open market, then lending those funds to companies.

Banks are paying close to 11 percent for the certificates of deposit they issue to come up with funds to re-lend. Those higher rates (bank certificates of deposit were around 9.5 percent in late spring) are cost increases to banks which the banks pass along to their borrowing customers.

The Federal Reserve, in an effort to slow down the expansion of credit and slow inflation, has boosted steadily key interest rates that it controls through its buying and selling of government securities on the open market -- the so-called federal funds rate.

The federal funds rate, at about 11 percent now compared with 10 5/8 percent a week ago, is the interest banks charge each other to borrow reserves overnight.

The central bank tries to control the amount of credit in the economy -- and indirectly the amount of money -- using the federal funds rate. By increasing the federal funds rate, it raises bank costs and, the Fed hopes, reduces the amount of loans that banks can make.

So far, however, businesses have been borrowing apace, despite climbing interest rates, and the money supply -- the amount of currency and checking accounts in the economy -- has been growing sharply as a result.

Economists think that the growth of the money supply is an important factor in the rate of inflation, although they differ on just how much importance should be attached to money growth.

Most money market economists think that interest rates will rise at least a half point (50 basis points in money market jargon) as the Fed continues to raise the federal funds rate.

But that is not a universal opinion.

Leon Gould, of Commercial Credit Corp., thinks the Federal Reserve has tightened about as much as it can without running the risk of a severe recession.

Gould said that the new Federal Reserve Board chairman,Paul A. Volcker, has shown an awareness of the need to keep interest rates from choking the economy.

Patrick Savin, of Drexel Burnham Lamber, said that the strong business loan demand is itself an indication that the economy is in a recession, as businesses borrow to finance inventories they cannot sell.

Soon, Savin said, businesses will start to convert those inventories into cash through price cuts (such as the rebate program Chrysler Corp. has embarked upon to rid itself of its huge supply of unsold cars).

When that happens, the demand for credit will abate.

Lurking in the background, however, is the value of the dollar on international markets.

If foreigners perceive that the Fed is still pumping reserves into banks -- even with a federal funds rate of 11 percent -- they will sell dollars again, triggering further declines in the value of the U.S. currency.

Even if domestic recession worries might make the central bank want to hold off on further tightening in monetary policy, international concerns might push the Fed in the opposite direction.