March 23 · Published May 21, 1993

Statement·Presser·Minutes

March 23, 1993 FOMC Minutes

Vote

• Wayne D. Angell ↑ dissented
  • Mr. Angell also emphasized the risks associated with any policy that did not firmly maintain a disinflationary trend. As he interpreted historical precedents, the typical result of a policy that tolerated some inflation was an eventual rise in inflation leading to permanently higher interest rates with adverse effects on economic activity. Indeed, he supported unpegging the federal funds rate to counter incipient price pressures showing through in commodity and finished goods prices. He believed that a clear signal of the Committee's commitment to price level stability would stabilize the price of gold along with the exchange value of the dollar and thereby provide a climate for further reductions in long-and intermediate-term interest rates. Such an approach to policy not only would assure a continuing disinflationary trend and eventual price stability, with very favorable implications for financial markets and economic growth, but it would in his view preclude an unsettling tendency for the debt markets to weaken every time newly available data appeared to suggest that economic growth was strengthening and that further monetary policy tightening actions therefore might be in the offing. In sum, such a policy would provide for the achievement of the Committee's objective of sustaining progress toward price stability which he believed was necessary for maintaining recent higher labor productivity, a permanently higher savings rate, and a prolonged period of economic expansion.
• Boehne
• E. Gerald Corrigan
• Alan Greenspan
• Silas Keehn
• Edward W. Kelley, Jr.
• John P. LaWare
• Lawrence B. Lindsey ↑ dissented
  • Messrs. Angell and Lindsey indicated that their concerns about the outlook for inflation prompted them to favor an immediate move to tighten reserve conditions. In their view, such an action was desirable not only to arrest the possible emergence of greater inflation but especially to promote further disinflation. They were persuaded that monetary policy currently was overly accommodative as suggested by various indicators such as recent data on consumer and producer prices, the upswing in commodity prices, the low level of real short-term interest rates, and what in their judgment was a relatively depressed foreign exchange value of the dollar given the comparative strength of the U.S. economy and international interest rate trends. They noted that the current federal funds rate was probably not sustainable in the long term and that a tightening move at this time might well avoid the need for more sizable and potentially disruptive policy actions later.
• Robert D. McTeer, Jr.
• David W. Mullins, Jr.
• Susan M. Phillips
• Stern

From the minutes

Read the full minutes

What changed from the previous meeting’s minutes

• Two members voted against maintaining reserve pressure, favoring immediate tightening.
• M2 and M3 growth ranges for 1993 were lowered by half a percentage point.
• Unemployment rate fell from 7.3 percent to 7.0 percent.
• Dollar's trade-weighted value declined over the intermeeting period.
• Directive expected moderate M2 and M3 growth in second quarter, not little change.

Summary generated automatically from the two documents.

Source