Since the beginning of November, the Federal Reserve has cut short-term interest rates four times, has buttressed banks by allowing them to withdraw several billion dollars that they were required to keep on deposit at Federal Reserve banks and, on Tuesday, cut the interest rate it charges when banks borrow money directly from the central bank.

Those moves, coming hard and fast, convinced somefinancial analysts that the Fed has decided to pull out all the stops, ignore inflation and flood the nation with enough cash to halt the economic slump.

That is not the way, however, that either Fed officials or Bush administration economists see it.

While different Fed policy makers weigh their multiple goals for the economy differently, there still is a strong consensus among them that to do nothing now that will make the job of controlling inflation harder in the long run.

Indeed, the Fed's continuing concern about inflation explains its cautious, restrained response to what most forecasters believe will turn out to be the nation's ninth recession since World War II. The Fed's critics say it should have begun to cut rates aggressively several months ago.

Shortly before the Fed's latest move, an administration economist said he believed "some additional easing is desirable" in monetary policy. But he also said such easing should not be massive.

"I don't want them to spook financial markets and you don't want to torpedo the dollar," the economist declared.

If investors were spooked by fears of higher inflation, they would demand higher returns on bonds and other securities as protection for their investments, which would cause long-term interest rates to go up. That is exactly what no one at the Fed or in the administration wants at this point.

Similarly, if the country's interest rates fell too far compared with those in other nations, such as Germany and Japan, it could discourage foreign investment in the United States and drive down the value of the dollar.

Any increase in inflation expectations could also hurt the U.S. currency, and too large a drop in the dollar's value could add to inflation by causing the cost of imported goods to increase.

With the economy in the midst of a slump, however, lowering interest rates hardly sows the seeds of future inflation. That is particularly true now, when banks are lending so little money that the Fed's injection of cash into the banking system has not been translated into faster growth of the money supply. The Fed injects more money into the economy when it wants short-term interest rates to fall.

All of those elements were cited by the Fed when it announced Tuesday that it was cutting its discount rate: "Action was taken against the background of weakness in the economy, constraints on credit and slow growth" of the money supply.

The "constraints on credit" was a reference to the fact that many U.S. banks recently have been making fewer loans.

Hard hit by loan losses on real estate, which the banks must cover out of earnings or their capital base, at the same time the government is raising the level of required capital relative to the amount of loans on the books, many banks are complying by reducing the loans on the books.

These pressures on the banks explain reluctance by financial institutions to cut their 10 percent prime lending rate despite the reduction in other short-term rates orchestrated by the Fed. With loan demand weak and bank profits being squeezed by the need to provide for future losses on bad loans, only a few regional institutions have reduced the prime rate to 9.75 percent.

In terms of the money supply growth, the Fed has been focusing on the measure known as M2, which includes currency and travelers checks in circulation, checking and savings deposits at financial institutions and time deposits of under $100,000.

The Fed has been aiming for an increase in money supply between the fourth quarter of last year and the current quarter of somewhat above the midpoint of a 3 percent to 7 percent range. Since early October, as the economic downturn gathered momentum, M2 has declined and by early this month was running close to the bottom of the range.

Some of the Fed officials who are hawks when it comes to fighting inflation, such as Cleveland Federal Reserve Bank President Lee Hoskins, place great emphasis on M2 growth as an indicator of future economic strength and inflationary pressure. If the M2 growth rate declines over time, so will inflation, these officials maintain.

But too little money growth can also squeeze the economy so hard that it begins to contract. The Fed's anti-inflation game plan in recent years has never sought to make that happen.

The game plan was working reasonably well up until Iraq invaded Kuwait in early August. Oil prices soared and the resulting burst of inflation took a sharp bite out of the incomes of American workers.

The invasion by Iraq also caused consumer and business confidence to plummet. Since the economy was growing very slowly before the invasion, that double whammy pushed it over the edge.

Nevertheless, when rising oil prices began to undercut the economy, the Fed did not respond by aggressively reducing interest rates, in contrast to its strategy during the last two oil price shocks, in 1973-74 and 1979-80. The central bank's initial responses during each of the crises was to pump more money into the banking system to offset the depressing effects of higher oil prices.

This time, there was no move to accommodate higher oil prices.

"As long as the Fed allows the funds rate to decline gradually but not allow any rise in money {growth}, domestic demand will remain weak," predicted Mickey Levy, chief economist for the firm CRT Government Securities in New York.

"The Fed is unlikely to shift toward aggressive monetary stimulus for a while, until the core rate of inflation declines significantly.

"Importantly, a modest and gradual decline in {interest rates} that merely reflects subsiding demand pressures does not constitute a monetary easing and will not generate a pickup in product demand," Levy said.

Even in the absence of such stimulus from monetary policy, Fed officials are hoping -- and predicting -- that the decline in economic activity will be both brief and mild.

Obviously, whether that forecast is right will depend not just on Fed policy but also on the outcome of the tense confrontation with Iraq over the future of Kuwait.