With interest rates low, Alan Greenspan is Mr. Nice Guy. But given plenty of economic vigor, renewed inflationary worries, expectations of further dollar weakness, and the agonizing twin deficits, some pros argue those low short-term interest rates may not remain as low as everyone expects, and, in fact, may rise more than anyone expects.

Or as money manager Leonard Mohr of Los Angeles-based MCR Associates puts it: “Mr. Greenspan could be our new Dracula or Godzilla.”

Seemingly, the rate winds are shifting. A couple of months ago, for example, Merrill Lynch echoed the widely held view that interest-rate jitters were unwarranted and predicted the Federal Funds rate (the fee banks pay to borrow overnight from each other) would stop rising at 2.25%.

Not so. On February 2, the Fed, in its sixth consecutive hike, boosted short-term rates to 2.5%. Further, Mr. Greenspan noted in recent congressional testimony that the federal funds rate “remains fairly low” despite the series of boosts. This implies to Merrill’s chief North American economist, David Rosenberg, that further rate increases are likely. Noting policymakers are saying that, at 2.5%, the funds rate is still not “neutral,” Mr. Rosenberg concludes neutral is closer to 3.25% – 3.5%. That points to, he believes, tightening at each of the next three Federal Open Market Committee meetings.

Another three or four rate increases are also seen by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, who observes that rate pressures are on the upside because “the economy is clearly more resilient than some give it credit for.” Main drivers of an economic cycle – profits, inventories and housing demand – are all rising simultaneously, he points out, so much so he’s become more optimistic about growth throughout the year. He sees GDP growth in the low 3s in the first and second quarters, but then jumping to 4% or higher in the third and fourth quarters.

The February jobs report will be announced today, with consensus calling for the creation of 225,000-250,000 new jobs for the month. But there’s also speculation the number could top 300,000. If that’s the case, some economists see a more aggressive Fed on the rate front. As for inflation, most economists and the government believe it will be tame, and Mr. Greenspan himself characterizes inflation as low. In response, Jeannette Schwarz, author of the Option Queen Letter, raises the questions: “Where are they hiding? Under the bed? Out in the woodshed? On Mars? Are they on hallucinogens? I thought LSD went out of style.”

She takes note of the rise in oil from $40 to $50 a barrel, and recalls when $40 was considered expensive. She also points out the Reuters CRB Index recently hit a new high and observes manufacturers have no choice but to increase prices due to higher raw material costs. Likewise, wholesale prices in January rose at the fastest rate in six years. To Ms. Schwarz, it means inflation and rates are surely headed higher.

If the policy-makers were to raise rates by a quarter percentage point at each meeting, that would put the Federal Funds rate at 4.5% by year-end. That’s not what Wall Street expects, but rather a year-end rate at around 3.75%.

However, economist J.C. Spender takes sharp issue with the prevailing views that rate hikes will likely be confined to 25 basis points and short-term rates will end the year in the 3.5%%-3.75% range. “That’s BS,” he tells me. “Why not increases of 50 points or more, or rates at 6% or even 13%. I’d be surprised if it was just 3.5%.”

Mr. Spender, Professor of Business Strategy at the Open University Business School on the outskirts of London, reasons rates could easily climb higher than anyone imagines because of the catastrophic budget and trade deficits that have to be funded with overseas money. He also believes the Fed will have no choice but to push rates higher to defend the dollar. Also creating upward rate pressure, he points out, are the jobless recovery, funding of health care, the question of privatization of Social Security and the costs of financing the war.

The bottom line: Is there another Godzilla on the horizon?