December 20, 1994 FOMC Minutes

Vote

Alan S. Blinder
J. Alfred Broaddus, Jr.
Robert P. Forrestal
Alan Greenspan
Jerry L. Jordan
Edward W. Kelley, Jr.
John P. LaWare ↑ dissented
- Mr. LaWare dissented because he favored an immediate policy tightening action. In his opinion, the expansion remained quite strong, with high and increasing levels of utilization in labor and capital markets, and he saw a serious risk of rising inflation. In the circumstances, he also feared that a failure by the Committee to take restraining action could heighten inflationary expectations by raising concerns about the System's commitment to the objective of sustainable, noninflationary economic growth.
Lawrence B. Lindsey
William J. McDonough
Robert T. Parry
Susan M. Phillips
Janet L. Yellen

From the minutes

FOMC minutes

Mr. Broaddus dissented because he continued to question the desirability of the System's foreign exchange market intervention and therefore the desirability of maintaining or enlarging the swap arrangements that facilitate them. In his view continued System participation in such operations with the U.S. Treasury presented an unacceptable risk of reducing the System's credibility and its ability to conduct monetary policy effectively. He felt this risk was particularly high in this instance. Moreover, as at the March 22, 1994, meeting of the Committee, he had serious concerns about the appropriateness of the foreign exchange operations this particular enlargement would support. In his view, the expansion of this arrangement was equivalent in many respects to a fiscal policy initiative of a kind that should be explicitly authorized by the Congress.

It was agreed that the next meeting of the Committee would be held on Tuesday-Wednesday, January 31-February 1, 1995.

The meeting adjourned at 12:45 p.m.

Donald L. Kohn Secretary

Read the full minutes

What changed from the previous meeting’s minutes

The FOMC approved a temporary increase in the swap agreement with the Bank of Mexico from $3 billion to $4.5 billion.
The U.S. Treasury increased its swap facility with the Bank of Mexico by $1.5 billion to $4.5 billion.
Mr. LaWare dissented from the policy action, favoring immediate tightening, while Mr. Broaddus dissented from the Mexico swap increase.
The directive shifted to an asymmetric bias toward restraint, with all but one member supporting it.
The discount rate was increased from 4 to 4.75 percent on November 15, 1994.
The next meeting was scheduled for January 31-February 1, 1995, instead of December 20, 1994.

Summary generated automatically from the two documents.

Source