Unusual pressures in financial markets in April and early May produced tighter conditions and higher interest rates than Federal Reserve policymakers had expected or sought, but at a May 19 meeting they decided to keep the tighter policy, according to a record of the meeting released yesterday.

Some of the policymakers, members of the Federal Open Market Committee, or FOMC, wanted to tighten even further in May to counter rising inflationary expectations in financial markets and to help stabilize the value of the dollar.

While a majority of the 10 members -- there were two vacancies at the time -- decided against making cash reserves still less readily available to the banking system, they did indicate they would accept such a further tightening if inflationary developments or movements of the dollar required it.

One FOMC member, Fed Governor Martha Seger, dissented because "she did not want to lean on the side of any tightening of reserve conditions beyond the firming that had occurred since the March meeting," the policy record said.

Seger expressed concern that a tighter policy "represented a risk to an already weak economic expansion," the statement said. "She noted that the negative effects of recent increases in interest rates had not yet been felt in the economy."

However, most FOMC members "saw a lesser and relatively limited risk to the expansion under current economic conditions and one that needed to be accepted given the pressures on the dollar and the potential for inflation," the policy record said.

Most analysts believe the Fed has not increased pressure on bank reserves since the May meeting. Rather, there were signs recently that the central bank may have decided to ease up a bit, though analysts said the evidence is not clear