''Ideally,'' says a high Federal Reserve official, ''the US economy should grow at a 4 percent annual rate over the next few years. But it is growing faster - too much so, even with slack capacity and high unemployment.''
This view, shared by a number of Fed officials, sparks sharp debate among the Fed's seven governors and the broader Federal Open Market Committee (FOMC), which sets monetary policy:
At what point should the nation's central bank act to cool off the economy - not stop the recovery, but slow it down - to head off another round of inflation?
''The Fed should act right now,'' a senior bank official says. ''If we step in now, it may take only a 1 percent rise in interest rates to slow things down. If we wait six months, it may take 2 percent - nine months and it could be 3 percent.''
He says a rate hike of that magnitude could set the economy back on its heels and greatly magnify the repayment problems of debtor lands.
The FOMC is split on the issue. Some members, while wary of inflation, are deeply concerned about high unemployment in the United States and by the fragility of the debtor countries, which would be hurt by a climb in interest rates.
This group argues that, given the slackness in the economy - factories operating at 70 percent of capacity, and with more than 11 million Americans out of work - the Fed can afford to wait.
''Inflation,'' says a Fed official who urges quick action, ''has hit bottom. The trend now will be up. The Fed's task is to foresee at what point to clamp down, before inflationary tendencies spread throughout the economy.''
The consumer price index, meanwhile, climbed 0.5 percent in May, slightly lower than the 0.6 percent increase of April. So far this year the index has risen at a 3 percent annual rate, compared with 3.9 percent for all of 1982.
Many experts, in and out of government, say that the nation's overall inflation rate is now running at 4 to 5 percent, with upward pressure as the recovery gathers steam.
Two factors - the rapid growth of the money supply and the failure of Congress and the White House to curb future budget deficits - distress all Federal Reserve officials, regardless of where they stand on curbing inflation.
They see themselves, under the leadership of reappointed chairman Paul A. Volcker, forced to make tough decisions in coming months as they juggle the conflicting forces of inflation, unemployment, and interest rates.
''The May increase of M-1,'' says a senior Fed official, speaking of the nation's basic money supply, ''was horrendous - 26 percent at an annual rate. The June figures so far are similar.'' Money growth at this pace - far above the 1983 targets set for M-1 by the Fed - impels lenders to keep interest rates high to protect themselves against inflation over the life of their loans.
Clamping down on the money supply would also boost interest rates - but without the accompanying inflation. That, at least, is the view of those within the Fed's white marble palace who seek early action.
A budget stalemate between President Reagan and Congress, meanwhile - stemming from their inability to agree on spending priorities and taxes - threatens to keep the deficit at 6 percent or more of the gross national product until the late 1980s.
This will occur at a time when the economy is growing, spurring a brisk demand for capital by the private sector at the same time that the US Treasury is borrowing hugely to finance the deficits. This, in the view of many experts, is a sure recipe for inflation, high interest rates, or both.
Fed officials are acutely aware that their long battle against inflation from 1979 to 1982 resulted in deep recession, with bankruptcies and unemployment high.
''This time around,'' says a senior Fed official, ''the tightening up (on the money supply) would take place in an economy that is rising, along with unemployment dropping, however slowly. So the pain would be much less than in 1981-82, when the clamping down was made in a declining economy, with the jobless rate climbing.''
The international debt crisis, says another Fed official, adds to the complexity of whatever course the central bank takes - creating, in his words, ''a horrible dilemma.''
At some point the economy may require higher interest rates to stave off inflation. But higher rates could wreck the chances of Brazil, Mexico, and other major debtor countries to borrow the new loans they need to keep afloat until their exports grow.