May 18 · Published July 9, 1993

Statement·Presser·Minutes

May 18, 1993 FOMC Minutes

Vote

• Wayne D. Angell ↑ dissented
  • Mr. Angell dissented because he believed that the persisting indications of rising inflation and the related deterioration in inflationary psychology called for a prompt move to tighten monetary policy. In his view, low real interest rates, a very steep yield curve, a surprisingly weak exchange value of the dollar along with the confirming price behavior of inflation-sensitive commodities such as gold underscored the need for Committee action to signal the System's continuing commitment to the eventual achievement of price stability. In his opinion, progress toward lower inflation was not likely in 1993 and 1994 in the absence of a monetary policy that was sufficiently restrictive to check inflationary expectations. He added that history demonstrated that a monetary policy focused primarily on developments in the real economy ran the risk of waiting too long to counter a worsening in inflationary expectations and thus requiring more substantial and possibly more disruptive policy changes later.
• Boehne • dissented
  • Mr. Boehne supported a steady policy course, but he dissented because he objected to a directive that was biased toward tightening. Although recent developments suggested that inflation would be somewhat higher and real growth somewhat lower during the year than had been expected earlier, he did not believe recent data indicated a fundamental shift in the outlook for inflation or the economy. He was concerned that adopting a biased directive might prove to be an overreaction to temporary factors affecting the inflation rate and inflationary sentiment. In his view, underlying economic conditions did not point toward an extended period of higher inflation. While the pace of economic growth conceivably could quicken, it seemed just as likely that the tempo of business and consumer spending could diminish in the face of uncertainty about the stance of fiscal policy, particularly with regard to potential tax increases. Given these uncertainties, he had a strong preference for keeping an open mind about possible Committee action during the intermeeting period and, accordingly, favored a balanced policy directive.
• E. Gerald Corrigan
• Alan Greenspan
• Silas Keehn
• Edward W. Kelley, Jr.
• John P. LaWare
• Lawrence B. Lindsey
• 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

• The directive changed from symmetric to asymmetric, with a bias toward tightening reserve conditions.
• Inflation was viewed as having risen faster than projected, with higher inflation expectations a key concern.
• Two dissenters shifted from favoring immediate tightening to opposing the tightening bias.
• M2 and M3 were expected to grow appreciably in Q2, reversing earlier contraction.
• Bond yields rose over the intermeeting period, versus falling previously.
• The next meeting was scheduled for July 6-7, 1993, instead of May 18.

Summary generated automatically from the two documents.

Source