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fomc | 1,979 | We should [adopt] that, I think, although that's short term. | 16 |
fomc | 1,979 | The midpoint of it, yes, but not really [the whole range]. | 15 |
fomc | 1,979 | It looks to the fourth quarter. | 7 |
fomc | 1,979 | It looks to June and to the middle of the fourth quarter. It tells us how much growth we have to have in the future to make up what has happened to date. And I believe the midpoint of the ~1 range is what's now being proposed [as our objective], isn't it? | 58 |
fomc | 1,979 | That's correct | 2 |
fomc | 1,979 | So, to get up to the midpoint of the proposed long-term range-- | 15 |
fomc | 1,979 | Which is the 1-1/2 to 4 - 1 / 2 percent. | 20 |
fomc | 1,979 | --we'd have to have 8 . 3 percent growth between now and March and 5.1 percent between now and June. And those are-- | 32 |
fomc | 1,979 | That's only because we had negative rates of growth for-- | 11 |
fomc | 1,979 | I understand that, but we've got that behind us. | 11 |
fomc | 1,979 | Yes, and that's why it can grow faster from here on. | 13 |
fomc | 1,979 | I don't think the comment you made that it implies higher interest rates is necessarily true, Nancy. It depends on the economy. If the economy is strong and we get a lot of inflation, they probably would go higher; but otherwise I think it is fairly neutral. | 53 |
fomc | 1,979 | The [projected funds rate] ranges [shown in Appendix I of the Bluebook] are 10 to 10-1/2 percent for the first quarter, 10 to 10-314 for the second quarter, 9-3/4 to 10-3/4 for the third, and 9-1/2 to 10-1/2 for the fourth. | 81 |
fomc | 1,979 | That may not be the most reliable projection. | 9 |
fomc | 1,979 | Well, I don't think any of these projections is reliable, Paul. | 14 |
fomc | 1,979 | If I may say s o , Mr. Chairman, on our projected interest rates perhaps we've swung too much to giving ranges. We thought they would be helpful. But, Governor Teeters, while we have allowed for some increase. it's the midpoints that we think are the most likely [for the funds rate] and the midpoints are 10-1/4 and 10-... | 213 |
fomc | 1,979 | Well, Steve, in my limited experience on the Board I have found that the interest rates are always at the top of the range. | 27 |
fomc | 1,979 | Your experience only covers a very short period. | 9 |
fomc | 1,979 | That's right. I thoroughly agree with you, but-- | 11 |
fomc | 1,979 | Well, these ranges have been created from the fourth quarter, without the expectations of the low rate of growth we have had in the aggregates so far in the year. Is that correct? | 37 |
fomc | 1,979 | Well, no, the interest rate assumptions take all of that into account. They were merely meant to express the staff's view that if interest rates were going to go anywhere, it is more likely to be up than down in the first half and more likely to be down than up in the second half given the GNP projections. This was jus... | 78 |
fomc | 1,979 | All right. Let's try the 1-1/2 to 4-112 percent again. How many of the voting members would be willing to support that? I saw Paul's hand, and I count Chuck, Ernie, Bob, Dave, Phil, myself--oh and Nancy. How many is that? Okay, thank you. How many would not? I count two. That sounds like a pretty overwhelming concensus... | 200 |
fomc | 1,979 | No, it was 5-1/2 to 8-1/2 percent. | 19 |
fomc | 1,979 | Excuse me, did I say something wrong? It was 5-1/2 to 8-1/2 percent and 6-112 to 9-112 percent. Jot those down. Put along side them two alternatives of 5 to 8 and 6 to 9 . That is shaded down just 1/2 point. How many of the voting members would like the widened Axilrod numbers of 5-112 to 8-1/2 percent and 6-112 to 9-1... | 170 |
fomc | 1,979 | Mark, I think, wants it much lower | 9 |
fomc | 1,979 | I'm just looking [at my notes]. You would want something lower, [Mark]. Who didn't vote? Dave, what would you like? | 28 |
fomc | 1,979 | I'd prefer something a little higher | 6 |
fomc | 1,979 | So you ought to be put at least in the Axilrod group. | 15 |
fomc | 1,979 | I would prefer Steve's original [suggestion]. | 10 |
fomc | 1,979 | Given the presumption, M r . Chairman, that we have a consistent set of numbers in alternative B, so far as one can argue there's consistency there. | 32 |
fomc | 1,979 | I just want to get the votes again. These were straw votes. There were two for the wider Axilrod ranges and five for the slightly lower ones. [One] would like to be higher than either of these and I gather the other two would like to be lower, is that right? Having heard all of that, let's put together another proposal... | 241 |
fomc | 1,979 | What interest rates go with this? | 7 |
fomc | 1,979 | Well, it's for a whole year. We can't really tell. | 13 |
fomc | 1,979 | I mean what does it imply? | 7 |
fomc | 1,979 | For the upper end of the ranges, it could imply, I would assume it would imply the higher-- | 21 |
fomc | 1,979 | The staff thinks that the interest rates in Appendix I go with it, assuming that their GNP projection is right. | 23 |
fomc | 1,979 | Except that we have M2 and M3-- | 10 |
fomc | 1,979 | A little higher. | 4 |
fomc | 1,979 | --a little higher than the staff's " B . " | 12 |
fomc | 1,979 | With the M1 range, I think we can get to 10 or 10-1/2 percent growth here, which is equal to nominal GNP growth and therefore would require no rise in interest rates. I'm talking about 10 percent, not the midpoints. | 55 |
fomc | 1,979 | On the other hand, if we get a cyclical decline of the kind Frank was talking about-- | 20 |
fomc | 1,979 | We'll have lower rates. | 5 |
fomc | 1,979 | --rates are going to come down. | 8 |
fomc | 1,979 | Mr. Chairman, are you planning to elaborate on the adjustments in M1 as has been discussed at the staff level? Or are we going to go public, in effect, with these M1 figures, making some allusion to the ATS effects in the-- | 52 |
fomc | 1,979 | These will be disclosed publicly in the written report to Congress. That will be the first and only public disclosure. It is contemplated that the report will make it very clear that the M1 numbers are based upon an adjustment for ATS and it will say something about velocity and demand, but I don't think-- | 60 |
fomc | 1,979 | We're hopeful that velocity will grow more than normal but we won't put that in those numbers. | 18 |
fomc | 1,979 | Will the 3 percent figure be described or the 5 percent on the-- | 16 |
fomc | 1,979 | I don't think the 5 percent will be but 3 percent will get discussed because if it isn't in the report I will be asked specifically what we have assumed. We can't be deceitful about it; we have to tell them the truth. The truth is that on the basis of [our estimate of the effects of] ATS accounts, forgeting any change ... | 95 |
fomc | 1,979 | Which is an increase. | 5 |
fomc | 1,979 | Which is what we were trying to do before, so we could get within it. | 17 |
fomc | 1,979 | The prior M1 range was 4-1/2 to 6 percent. | 17 |
fomc | 1,979 | No, 4 to 6-1/2 | 11 |
fomc | 1,979 | And we were taking 6-1/4. | 11 |
fomc | 1,979 | We were going from 4 to 6-1/2 percent and we were always on the upper side or out of the range. | 28 |
fomc | 1,979 | We were essentially ratcheting it up by first going to the upper side of it and then by chosing a range that would make the upper side fall in the middle. | 35 |
fomc | 1,979 | Assuming that ATS accounts continue to grow. MR. ALTMA". Vice Chairman Volcker Yes President Baughman Yes Governor Coldwell Yes President Eastburn Yes Governor Partee oh, I guess so Governor Teeters Yes Governor Wallich NO President Willes No President Mayo Yes | 55 |
fomc | 1,979 | Now let's take an official vote. | 7 |
fomc | 1,979 | Do you want me to call the roll again? | 10 |
fomc | 1,979 | No. Does anyone wish to change his or her vote from that? | 14 |
fomc | 1,979 | I'll change my "I guess so" to "yes." | 12 |
fomc | 1,979 | Okay, thank you. That was a pause brought to an affirmative. | 14 |
fomc | 1,979 | Is it appropriate to ask, Mr. Chairman, whether this dissent would cause you any serious inconvenience in the hearing? | 23 |
fomc | 1,979 | Well, I don't think so. We should operate on a rule that everyone votes as they see fit; that has been our policy. We are in a time when we see foolish stories about this sort of thing in the press that people love to play on, but I don't think we should let that change our desire to vote our conscience. I don't see an... | 88 |
fomc | 1,979 | Thank you very much. | 5 |
fomc | 1,979 | May I ask Scott a question, sir? | 9 |
fomc | 1,979 | You certainly may. | 4 |
fomc | 1,979 | When the Chairman describes the adjustment for ATS accounts and so forth, if that is perceived as being a more expansive policy than the one we had last year, would that have a depressing effect on the dollar? | 41 |
fomc | 1,979 | If it is perceived that way, but I'm not sure it would be written that way. | 18 |
fomc | 1,979 | All these numbers are lower than before, and the foreigners might perceive it-- | 15 |
fomc | 1,979 | Well, no matter what we say about M1, the fact is that M2 and M3 are lower. So in that sense the people who don't want to listen to us on M1 are people who just don't want to listen, because we are just getting a more logical M1 range consistent with monetary restraint and the other ranges are coming down. S o if they ... | 106 |
fomc | 1,979 | What these numbers say is that we can go as low as 1-1/2 percent and as high as 9-1/2 percent and still be within the range. | 37 |
fomc | 1,979 | No, it means we can go as low as minus 5 percent. | 15 |
fomc | 1,979 | No, we won't publish it, but if we add the 3 percent plus the 2 percent shift, that gets it to 9-1/2 percent. | 34 |
fomc | 1,979 | 1-1/2 percent is not the bottom. | 11 |
fomc | 1,979 | If we don't get either one of those it could go to 1-1/2 percent, so I say the range is 1-1/2-- | 33 |
fomc | 1,979 | No it's a minus-- | 5 |
fomc | 1,979 | It's below that because we might have a negative on the demand shift. | 14 |
fomc | 1,979 | Yes, I think that's right. The ATS doesn't go the other way but we could get-- | 19 |
fomc | 1,979 | The ATS won't reverse; it can stop, but it won't reverse. | 14 |
fomc | 1,979 | So we are talking 0 to 9 percent. | 11 |
fomc | 1,979 | Yes. | 2 |
fomc | 1,979 | That's what I said when I introduced the subject. I said we have widened the range. The probability of hitting it is better. | 26 |
fomc | 1,979 | This kind of a range, of course, is just for discussion inside this room. | 17 |
fomc | 1,979 | Of course. I hope we don't hear about it elsewhere or in any other way. Dave, do you have a question? | 25 |
fomc | 1,979 | Yes. Can I assume, in the part of the report that asks us to talk about the consistency between [our objectives] and the Administration's program, that this will pose no problem of inconsistency? | 41 |
fomc | 1,979 | Well, the question is not the consistency, but the relationship. | 13 |
fomc | 1,979 | All right, the relationship. | 6 |
fomc | 1,979 | If one looks at the Administration's short-range goals, I would say based on our own [projections] that for 'I9 those goals could be achieved within this [set of ranges]. Now, I think that we have more possibility of divergence in 1980, but we have not yet locked in our 1980 ranges. And, therefore, I think our report c... | 83 |
fomc | 1,979 | I think we can say it's supportive but that we will have to review it as time goes on. | 20 |
fomc | 1,979 | And it depends, of course, upon real events in the economy over the period of time as distinguished from goals. They have changed and shifted a little, of course. We have been talking about our projections of what will happen under certain assumptions. But our comments are to be against what the Administration might be... | 78 |
fomc | 1,979 | It's goals rather than projections on their part. | 9 |
fomc | 1,979 | That's right. So they have an out. They can say well that's what we tried to do and then we got higher or lower-- | 27 |
fomc | 1,979 | I'd tell them it's unrealistic even to try. | 9 |
fomc | 1,979 | Well, we will get into the report next week. Did we have any final shifts one way or the other? We didn't pick up any more positive votes. All right then, that's a vote. Let's turn to the next subject on my agenda which is to deal with current monetary policy and the domestic policy directive. We will turn to Steve aga... | 132 |
fomc | 1,979 | [Statement--see Appendix.] | 6 |
fomc | 1,979 | S o are you suggesting alternative I for M1 or are you suggesting 4 to 9 percent? | 21 |
fomc | 1,979 | I would think about 4 to 9. | 10 |
fomc | 1,979 | And leaving the fed funds range where is is. Is that what you're saying? | 16 |
fomc | 1,979 | And an asymmetrical interpretation of the directive--that is, to permit tightening if growth moves above the midpoint of the 4 to 9 percent range but not easing until growth got to the bottom of the range. That was [the bias] the Committee adopted last time in its directive at the December meeting. | 62 |
fomc | 1,979 | May I ask the Committee, all members, whether there is any sentiment for the alternate directive, which would deal with the proposition of not reducing the funds rate between now and the next meeting but would look to the possibility of raising it? That is, in effect, putting upper side limits on M1 and M2 and upper li... | 118 |
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