The 800-pound gorilla – that’s Alan Greenspan & Company – did its thing Tuesday, kicking up interest rates for the seventh consecutive time since June and knocking the Dow down nearly 95 points.

Unfortunately for investors, this trend shows no signs of tapering off. In fact, growing sentiment has it the string of rate hikes will extend to 10 in a row, and one economist tells me we could actually see 14 increases in a row.

“The lovebird [a reference to the Fed] has become a hawk,” said Gerald Schiller, one of Los Angeles’s more gifted day traders. With inflation rearing its head, more rate increases are inevitable and the course of interest rates poses a growing market risk, he added.

“Messing around with King Kong [another Fed reference] makes no sense since there’s no way you’re not going to get hurt,” he tells me.

More pain is what he expects, following a 10-month sprint which saw the Federal Funds rate – the fee that banks pay to borrow overnight from each other – balloon 175 basis points, or 1.75%, to 2.75%. “If the market goes down 95 points on a rate increase that everyone expected, what do you think it’s going to do the next time we get a rate increase, and the time after that?” Mr. Schiller asked.

The reason for Tuesday’s wicked decline reflects the market’s fears that rates could climb faster and perhaps higher than expected. That, in turn, leads to the obvious questions: How many more rate boosts are on the way? And how high is up?

The next three Federal Open Market Committee meetings are slated for May, June, and August, and Legg Mason’s chief fixed-income strategist, Sharon Stark, is one of a growing number of economists who now sees the string of rate hikes extending itself to 10 through an additional rate hike of 25 basis points at each of these meetings. That would result in a 3.5% Fed Funds rate in August.

How does she figure three more rate hikes? Because the chief news out of the latest FOMC meeting, she explains, is the evidence of hawkish tendencies. Pointing to the FOMC’s specific mention of the return of pricing power and firming labor conditions, she observes that the committee appears to be signaling to the markets that persistent inflation pressures are building. While Ms. Stark doesn’t think the FOMC will be required to tighten more aggressively, she cautions that if oil and commodity price pressures persist and labor costs rise – which is what some pros envision – a Federal Funds rate of 4% by year-end is a possibility.

Another string of three or four rate increases is also seen by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, who continues to believe that rate pressures are to the upside because “the economy is clearly more resilient than some gave it credit for.”

A more worrisome rate scenario is put forth by Standard & Poor’s chief economist, David Wyss. There are seven more FOMC meetings this year, and Mr. Wyss sees the possibility of a quarter of a point rate hike at each one of them. If that were to occur, it would mean 14 rate hikes in a row and a year-end 2005 Fed Funds rate of 4.5%. Likewise, he thinks a 50 basis-points boost is possible at one meeting, followed by no increase at the next meeting. In any event, he said, “rates are going higher.”

Why so? Because, he points out, Mr. Greenspan, wants to get the rate up to neutral (a rate that’s consistent with economic growth). Actually, Mr. Wyss pegs the year-end Federal Funds rate at 4% to 4.5%. He admits, though, he may be low balling the number if the economy turns stronger and inflation creeps up. In that event, he tells me, “you could see a Fed Funds rate of 5% to 5.5%.” He said he would give such a range a 20% possibility.

The clue to further rate increases, Mr. Wyss explains, may well hinge on changes in the core inflation rate, which is now 2.4%, up from 1.1% at the end of 2003. He feels the danger zone is 3%, which, he believes, would trigger more aggressive Fed tightening. As far as the economy goes, Mr. Wyss sees reasonably good GDP growth this year, up 3.8%, versus 4.4% growth in 2004.

Money manager Steven Baumritter of Los Angeles-based Baumritter Capital Partners thinks Tuesday’s nearly 100-point Dow sell off is an unmistakable warning of “more market chaos ahead on the interest rate front,” which is leading him to increase his cash reserves. As a result of his expectation of “tougher times ahead from the Fed,” more, he said, than people realize, he’s pretty convinced “we’re looking at a down market in 2005.”