Short-term interest rates in the world's largest economy won't stay as low as 1 percent forever.

　　That may seem an obvious, even simple-minded thing to say. Yet the thought has unsettled the stock market lately, as though investors were coming to grips with it for the first time.

　　It needn't be any trauma to face the fact: Sooner or later the US Federal Reserve is going to raise the overnight bank rate. The debate is about when and how much, not whether.

　　The point was driven home in late January when the Fed changed the language it was using to describe the outlook. Instead of talking about keeping rates low for a "considerable period," the central bank said it "believes that it can be patient in removing its policy accommodation."

　　Says tobias Levkovich, stock-market strategist at Citigroup Global Markets Inc, "The Fed may have been trying to rein in overly exuberant stock market enthusiasm by reminding investors of the inevitable need to lift rates to more normal levels."

　　Sounds like a wise idea for any investor - check your exuberance after a 12-month stretch in which the average stock mutual fund gained 40.9 percent. That was good enough, by the way, to beat the Standard & Poor's 500 Index by five percentage points, according to Bloomberg.

　　Reining in expectations is not at all the same thing as deciding the ride is over. A look at recent market history shows that stocks don't automatically turn into a pumpkin when rates begin to rise.

　　I checked the record on this two years ago, when talk spread of a possible switch in Fed policy. The last four times the Fed made the first move in a sustained series of rate increases, the market averaged healthy gains over the ensuing six months.

　　In those periods, two of which occurred in the 1980s and two in the 1990s, the Nasdaq Composite Index averaged a 17 percent gain, the S&P 500 a 9 percent advance. In only one of the four periods, 1994, did the indexes post losses, and those were mild.

　　Yes, rising rates do pose a challenge for stocks whenever they occur. They increase the allure of interest-bearing investments that compete with stocks for new money. In the models used by many investors to figure stock valuations, that means a potential lowering of price-earnings ratios.

　　Also, when money gets more expensive, it may crimp profit margins of many types of businesses.

　　None of these things, though, happens in a vacuum. While it may "take away the punch bowl" every now and then, the Fed's longer-term objectives - keeping the economy on a sustainable, low-inflation growth track - are eminently compatible with stock investors' hopes.

　　For fed-watching investors a quarter-century ago, the most important thing to see was not where interest rates were headed.

　　It was that the central bank was embarking on what would prove a successful campaign to subdue inflation.

　　Since then rates went up, rates went down, through at least half a dozen cycles of tightening and easing.

　　From the end of 1978 through the end of 2003, the S&P 500 climbed 13.6 percent a year and the Nasdaq Composite 12 percent.