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fomc | 1,978 | Well, our records show moderate growth [in] all those things, but it is a question of when you get the numbers. Now we come to what we have all morning been waiting for--what we do about all of this. | 47 |
fomc | 1,978 | Excuse me, Mr. Chairman. | 8 |
fomc | 1,978 | Yes. | 2 |
fomc | 1,978 | Are you going to handle the question that was raised by Mr. Proxmire? Are you going to assign that Kaufman proposal to the directive subcommittee or to somebody to review? | 37 |
fomc | 1,978 | Yes, to the Subcommittee [on the Directive]. | 11 |
fomc | 1,978 | The staff of the subcommittee has work under way on that | 12 |
fomc | 1,978 | So that will come forth and we will discuss it at some point. | 14 |
fomc | 1,978 | Okay. | 2 |
fomc | 1,978 | On the domestic open market operations, Peter Sternlight has been waiting patiently and is now going to tell us about the operations since the last meeting. | 29 |
fomc | 1,978 | Thank you, Mr. Chairman. [Statement--see Appendix.] | 13 |
fomc | 1,978 | Thank you, Peter. We need an action to ratify the transactions since the previous meeting. May I consider that a vote? Any objection? Hearing none, that is approved. Any questions or comments on Peter's report? Frank. | 47 |
fomc | 1,978 | Peter, I don't think you ought to apologize to the Committee for failing to keep the federal funds rate absolutely stable during the 4-week period. I think we would be better off if we could design a little more instability into the funds rate--create a little more uncertainty in the market as to precisely where policy... | 86 |
fomc | 1,978 | I would agree with that, President Morris. I didn't think I was apologizing but just explaining the rates as they were and the action we were taking under the circumstances. | 34 |
fomc | 1,978 | He is happier that it was on the upside than on the downside, I guess, particularly-- | 19 |
fomc | 1,978 | It is more comforting to have it that way. | 10 |
fomc | 1,978 | It is a little disconcerting that the explanation is that there was a [shortage] of bills available. | 23 |
fomc | 1,978 | It is a conscious effort on our part that collateral [unintelligible]. Any other comments or questions? Steve, if you will report to us now. | 32 |
fomc | 1,978 | Mr. Chairman, in view of the hour I think I would just note that the-- | 18 |
fomc | 1,978 | Does that mean you are hungry and you are ready to go or something like that? | 17 |
fomc | 1,978 | I was assuming that the Committee members might be. I would just note that the Bluebook simply indicates that we now expect M1 growth to accelerate. That is our projection. And the short-run range, particularly for M1, that you see is well above the long-run range that the Committee adopted. This again reflects our vie... | 90 |
fomc | 1,978 | Thank you, Steve. I'd like to give you a personal proposition, not intending to constrict your views but just to give you something to shoot at as a possible idea. If we are going to have any chance of living within our long-run range, we are going to have to tighten up here a little bit. I would suggest, therefore, th... | 246 |
fomc | 1,978 | Mr. Chairman, do you care to suggest whether you prefer a monetary aggregates or a-- | 18 |
fomc | 1,978 | Oh, I'm sorry. By saying on page 3, I meant to suggest using the monetary aggregates. I meant to say 5-1/2 to 9-1/2, 6 to 10, 6-1/2 to 7-1/4, and use "close to or slightly above" the current level. Paul, you have a comment? | 79 |
fomc | 1,978 | Well, I fully accept the implication of the earlier conversation and what you have just said--that we have to move here to tighten some. I guess my reaction to what you [proposed] is that maybe we ought to tighten that down even further. | 51 |
fomc | 1,978 | Even further? Well,-- | 5 |
fomc | 1,978 | Not necessarily in the size of the move, but in the way we specify these things. We just did a lot of talking about keeping within the long-term ranges and not changing them. I would much prefer to see these ranges set to straddle--they would be wider presumably because we are in the short run--what we agreed should be... | 361 |
fomc | 1,978 | Okay. Phil Coldwell. | 6 |
fomc | 1,978 | Mr. Chairman, I find myself very compatible with what Paul Volcker just said. The 2 to 8 range seems terribly wide to me for M1 but I like the upper limit; the lower limit seems a bit low to me. | 49 |
fomc | 1,978 | Where would you put the lower limit? | 8 |
fomc | 1,978 | Oh, perhaps a range of 4 to 8 or 3-1/2 to 8--something like that. M2 at 5 to 9 I could live with. The combination of the two I think is reflecting a restrictive position, which will mean--if the staff figures are reasonably close on this--that we will be moving the federal funds rate fairly promptly. I am perfectly wil... | 227 |
fomc | 1,978 | John Williams. | 3 |
fomc | 1,978 | I have a feeling that I may be getting in over my head, but we voted today to maintain the same long-run target ranges. M1 and M2 have been within those long-run targets and, therefore, I have trouble figuring out why we don't set the same short-run targets that we have for the long-run targets. | 66 |
fomc | 1,978 | Steve. | 2 |
fomc | 1,978 | Well, the aggregates do fluctuate quite substantially from month to month. In the Bluebook, of course, we are not setting targets; we are just trying to estimate what is likely to happen given a particular interest rate pattern. That is why I tried to make a point that what we think is going to happen, if we don't chan... | 76 |
fomc | 1,978 | It is [something] like 10 percent for the month of April, you see. Unless we do something, we are going to get outside of our ranges. | 33 |
fomc | 1,978 | In general, the Committee might want to consider short-run targets different from the long-run targets because there are often special factors one could point to that this month are affecting the money supply especially, which might lead to offsets later. In this particular case, they are not largely due to special fac... | 59 |
fomc | 1,978 | Bob Black. | 3 |
fomc | 1,978 | Mr. Chairman, my governing principle is what we said earlier. In light of the consensus that we need to get back within the targets, I think we need to take some tightening action. I remember quite well last year that we were faced with a tremendous bulge in the aggregates in April and we thought it was temporary and w... | 165 |
fomc | 1,978 | [Unintelligible] if you got zero. | 11 |
fomc | 1,978 | That involves, with an aggregates directive, our beginning to move up from the [6-3/4] percent. We think we are going to have a reversal in May, which we may not have, of course. On M2, I would want to go 4-1/2 to 8-1/2 and for the federal funds rate 6-1/2 to 7-1/2 with an asymmetrical midpoint of 6-3/4. We would stron... | 292 |
fomc | 1,978 | We might just want to delete lines 20 to 24, too; it is not a full picture. | 22 |
fomc | 1,978 | Phil Jackson. | 3 |
fomc | 1,978 | Mr. Chairman, while the thrust of the policy that I would have in mind is not substantially different from comments that have been expressed, I have a concern about making dramatic moves based purely on expectations and projections. As much as I admire the work that our staffs do, I just don't think that the results ha... | 215 |
fomc | 1,978 | It's April 26. | 5 |
fomc | 1,978 | The 26th is the Treasury [announcement]. | 10 |
fomc | 1,978 | If you were planning to tighten, it might be advisable to get it in motion before the announcements so the markets have a chance to revise their expectations. | 30 |
fomc | 1,978 | I don't think 1/4 point is sufficiently critical, so I would go ahead to the midpoint now. In other words, I'd rather err on the side of an increase. | 36 |
fomc | 1,978 | With an aggregates directive. | 5 |
fomc | 1,978 | Aggregates directive. | 4 |
fomc | 1,978 | We could wait and see what this week's aggregates look like. | 12 |
fomc | 1,978 | Yes, I wouldn't object to waiting until after Thursday to see what this week looks like. A whole week won't-- | 23 |
fomc | 1,978 | Bones. | 2 |
fomc | 1,978 | As I expressed earlier, Mr. Chairman, I feel strongly that the economy is already rebounding. And with the Treasury likely to actually be paying off some debt, I believe the time [to tighten] is here. I would support a gradual firming during this period rather than an abrupt move later on. The numbers that seem to attr... | 130 |
fomc | 1,978 | Ernie. | 3 |
fomc | 1,978 | Mr. Chairman, I think we should have a monetary aggregates directive and along with it, a funds rate range which centers on 7 percent. Now, I can go with either 6-3/4 to 7-1/4 or 6-1/2 to 7-1/2. If we go to the wider range on the funds rate, then I'd go with the aggregates of alternative B; with a narrower range, I'd u... | 107 |
fomc | 1,978 | Would you say that again, Ernie? | 9 |
fomc | 1,978 | The "C" aggregates with a federal funds range of 6-3/4 to 7-1/4. | 25 |
fomc | 1,978 | Yes, that's 5-1/2 to 9-1/2 and 6 to 10. Dave. | 25 |
fomc | 1,978 | I think we are all heading in the same direction; it is only a question of the specifications. I also get the impression that there is a tendency to be bold with the aggregates and rather prudent with the funds rate. I think we should try to be reasonably consistent. | 54 |
fomc | 1,978 | There is a psychiatrist with us! | 7 |
fomc | 1,978 | Old habits. | 3 |
fomc | 1,978 | I'd resist the temptation to slash the aggregates specifications. That is, [I'd favor] perhaps cutting another 1/2 point off what you had, Mr. Chairman, and make it 5 to 9 or perhaps 5-1/2 to 9-1/2--within that area. But I like your specification for the funds rate because it accomplishes something that I think has bee... | 111 |
fomc | 1,978 | I'd put my midpoint at 7 in my 6-1/2 to 7-1/4. It is a very good midpoint. Chuck. | 32 |
fomc | 1,978 | I, too, think that maybe the time has come to make a move. And I think we ought to take advantage of the probability that April will be a month of large growth in the aggregates to do that. We need to have an explanation and I think that provides us with the explanation. Also, in a way I agree with Dave that maybe we o... | 341 |
fomc | 1,978 | Mathematically I think it just works out that way. | 12 |
fomc | 1,978 | On my 6-3/4 to 7-1/2 percent range, I would move to 7 if this week the aggregates tend to confirm that April expansion of 10 percent. One other change I think I would make, Mr. Chairman, is in the directive in lines 27 and 28. I think it is a good idea to reverse the order of the longer-term objectives that we have at ... | 125 |
fomc | 1,978 | It is good. | 4 |
fomc | 1,978 | It rather shifts the emphasis and yet it leaves in gradual economic expansion as one of our objectives. | 19 |
fomc | 1,978 | Did you mention an aggregates or money market directive? | 10 |
fomc | 1,978 | A monetary aggregates rather than a money market directive. | 10 |
fomc | 1,978 | Larry. | 2 |
fomc | 1,978 | Yes, sir. [I favor] for M1, 4 to 8; for M2, 5 to 9; for the fed funds rate, 6-1/2 to 7-1/2; and an aggregates directive. I interpret that as not being bold but being momentarily responsible. | 66 |
fomc | 1,978 | Frank Morris. | 3 |
fomc | 1,978 | Well, Mr. Chairman, I like the Partee specifications of 4 to 9 and 5-1/2 to 9-1/2. I like the idea of our moving in anticipation of the bulge. It is going to be for the first time, as far as I know. I'm not quite as bold as Mr. Partee. I think we ought to instruct the Manager to establish a 6-7/8 percent rate by this F... | 119 |
fomc | 1,978 | Well, of course, he can't do anything for about a week around that financing and the 6-7/8 is really very little change. | 30 |
fomc | 1,978 | Frank, anything else? | 5 |
fomc | 1,978 | No. | 2 |
fomc | 1,978 | Steve, would you have any comments? | 8 |
fomc | 1,978 | I'd only say that I have listened carefully to Chuck and am supportive of his statement. | 17 |
fomc | 1,978 | Henry. | 2 |
fomc | 1,978 | I want to commend the staff for narrowing the aggregates ranges [shown in the Bluebook]. At the same time, I don't think a range of 6 to l0 with a midpoint of 8 is a very good way of getting to a 5-1/4 percent 1-year target. So I think we should hold these down in any event or treat them simply as triggers and not as p... | 238 |
fomc | 1,978 | Thank you. Mark. | 5 |
fomc | 1,978 | Thank you, Mr. Chairman. This is a strange day for me. I find that I not only agree with the staff but I agree with Chuck Partee almost in total. | 36 |
fomc | 1,978 | You did last time, too! | 7 |
fomc | 1,978 | I know it. It really has me worried; I've got to go back and rethink my position! | 20 |
fomc | 1,978 | There has been a lot of that going around. | 10 |
fomc | 1,978 | The only modification I would make is that I would be slightly more aggressive than some--but I think with the majority--in having M1 at 4 to 8. That simply forces us to be a little more aggressive on the funds rate if April and May come in strong. I very much like the 6-3/4 to 7-1/2 federal funds range and moving very... | 89 |
fomc | 1,978 | Okay. Willis, you haven't given us your views yet. | 12 |
fomc | 1,978 | Well, we are pretty much in agreement. I think it is probably important that the top of the range be down more than the bottom in terms of imagery and determination. And I remind you that we don't have to freeze these in stone for the month. We can come back by telephone and other ways to make adjustments. I think we h... | 246 |
fomc | 1,978 | John, did you have any specifics you would like to mention? | 13 |
fomc | 1,978 | No. | 2 |
fomc | 1,978 | Roger. | 2 |
fomc | 1,978 | I would adopt Chuck Partee's proposal. I would also, however, align myself with what Frank Morris has suggested--to take a small bite now and go to 6-7/8 percent immediately but to wait and be fairly cautious about moving on to 7. And I assume that if the aggregates begin to come in very strongly, we would delay moving... | 97 |
fomc | 1,978 | Well, Bob Mayo, you are the last one and you can, therefore, sum it up and tell us what we are really going to adopt. | 30 |
fomc | 1,978 | Well, I am prepared to come full circle, Mr. Chairman. I came in with figures jotted down here that happen to conform exactly to what you started this discussion with: 6-1/2 to 7-1/4 on the federal funds range, feeling that some tightening should take place and some of it immediately, [and] I would say 5-1/2 to 9-1/2 f... | 276 |
fomc | 1,978 | Well, thank you all very much. Let me see if I can synthesize this quickly. I don't think we have that much disagreement. On M1, we have 6-1/2 votes for something below 5, one of which is 2, and the rest of which are 4. Therefore, it would look pretty consistent to put the bottom at 4. On the upside we are kind of spli... | 126 |
fomc | 1,978 | No, I wouldn't. I think we ought to go to a 5-point range. | 18 |
fomc | 1,978 | Well, I think that it is split pretty evenly. I would see nothing wrong with putting 4 to 9. Excuse me, go ahead. | 31 |
fomc | 1,978 | I am just afraid of that low point and that high point. You get too high an average. The low point is significant only if you get an average of 3. | 35 |
fomc | 1,978 | Let's put down 4 to 8 for the moment. It is just for seeing where we come out here. We have Partee with 4 to 9 and a couple of others on the Committee agreeing with that and quite a few agreeing with it among the Presidents. On M2 it looks like the 5-1/2s have it. In other words, 5-1/2 to 9-1/2 appears to be the range ... | 131 |
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