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fomc | 1,978 | I'm kidding you. I am just teasing. There were other pressures at the time. I think what we need to do, Steve, is to see how we should organize a method to come back to this Committee with a series of options or possibilities, perhaps through a discussion phase and then a perfecting phase. With all these choices--pluse... | 96 |
fomc | 1,978 | Mr. Chairman, if it were feasible, could we possibly let an economist from each of these points of view get in the discussion? | 27 |
fomc | 1,978 | Why don't we get Steve to round up the right kinds of specialists to help us look at the pros and cons of various options? | 26 |
fomc | 1,978 | We will get a balanced group and then I would like to come up with four or five options. I wonder whether we will have three or four dissident opinions. | 33 |
fomc | 1,978 | No, we don't need that. I think it is more [unintelligible] to go through the exercise. All right now, I think we still have a question from our Secretary. | 39 |
fomc | 1,978 | Mr. Chairman, normally we would record a single vote for the longer-run targets. Is my understanding correct that we will have two dissents and the explanation will be that those members would have preferred raising the upper limit for M1 and that there are no dissents with respect to the bank credit ranges? | 61 |
fomc | 1,978 | That is right. All right, let's see if we can catch up. We are now at the point where Steve, the Committee's economist, is supposed to have some comments on prospective financial relationships. He did not have any, did he? | 49 |
fomc | 1,978 | No, I have no comments. | 7 |
fomc | 1,978 | Have we heard from Peter Sternlight yet? | 9 |
fomc | 1,978 | No, he hasn't said a word. No, he [isn't] finished. | 17 |
fomc | 1,978 | Now we will have the report of open market operations since the [previous] meeting from Peter. | 19 |
fomc | 1,978 | [Statement--see Appendix.] | 6 |
fomc | 1,978 | Thank you very much, Peter. We need a vote to ratify the transactions since the previous meeting. Hearing no dissent, we can consider that approved. Steve, do you have any further comments? | 40 |
fomc | 1,978 | No, I don't, Mr. Chairman. | 9 |
fomc | 1,978 | Considering the thorough discussion we have had on the economy and on the monetary situation, I suggest that I call the names alphabetically, first of the voting member and then of the nonvoting members. I would suggest, if you wouldn't mind, that you first give us a quick rundown--you can refer to page l2 of the Blueb... | 151 |
fomc | 1,978 | Mr. Chairman, my views are pretty well captured in alternative C. It seems to me that that would call for a 1/4 point increase in the federal funds rate promptly. It seems to me that the market is expecting it and actually installing it would tend to put the dealers back into a [more] conventional operating position wh... | 86 |
fomc | 1,978 | Phil Coldwell. | 4 |
fomc | 1,978 | Mr. Chairman, my recommendation to the Committee would be encompassed in the following: 4 to 8 percent for M1, 5 to 10 for M2, and a 7-3/4 to 8-1/8 percent funds rate range with a skewed midpoint of 7-7/8, to which I'd move promptly. I do that deliberately. | 79 |
fomc | 1,978 | I thought it was deliberately. | 6 |
fomc | 1,978 | I think it is desirable to take another notch in this but not as great as a full 1/4 percentage point on a prompt move. I don't think we have excessive restraint on the economy yet. In fact, I don't really see much restraint in the change. You will note that the ranges as given do move us down and if the Committee is r... | 146 |
fomc | 1,978 | Thank you. Dave. | 5 |
fomc | 1,978 | Well, I would pause for this month and go with alternative A or B. That would seem to me consistent with the kind of economic uncertainties that were revealed in our discussion. And those aggregates ranges would be satisfactory to me; I would wait and see what happens next. | 54 |
fomc | 1,978 | Thank you, Dave. Phil Jackson. | 8 |
fomc | 1,978 | I would move up 1/8 on the federal funds range to 7-5/8 to 8-1/8, with instructions to the Desk to go to 7-7/8 promptly. I think the ranges stated for alternative A or B--5 to 9 and 7 to 11--are satisfactory. | 69 |
fomc | 1,978 | Chuck. | 2 |
fomc | 1,978 | I would go with alternative A or B. I really would have preferred an M1 range of 5 to l0. Remember, we are including July and it still may be a bulge month of some size. So, I guess I would [propose] an alternative M1 range of 5 to l0. I certainly think we have had enough movement in interest rates for the time being. ... | 204 |
fomc | 1,978 | Thank you, Chuck. Paul. | 7 |
fomc | 1,978 | Well, I think we have a timing problem here, Mr. Chairman. I heard an awful lot of talk this morning, both before and after the break, about the inevitability of interest rates going up. It is an argument whether they are going up by l or 2 or 3 percentage points. I'm not at all sure that they are going up as much as l... | 220 |
fomc | 1,978 | An 8 percent midpoint? | 6 |
fomc | 1,978 | An 8 percent midpoint. I would use the money market directive so that we would not move readily above that but I would allow that possibility. [And I'd move] fairly promptly to give it a nudge. | 43 |
fomc | 1,978 | Henry. | 2 |
fomc | 1,978 | Well, I think we can do without an interest rate increase at this time. If we do 1/4 every two months we will do 3/4s over the rest of the year to January and I think that is what one can now foresee as likely. So I would stay with 7-3/4. I would like to see an upward move triggered more readily than a downward move, s... | 141 |
fomc | 1,978 | Thank you, Henry. Willis? No, I'm sorry, Mark is next. I am not very alphabetical today. I didn't mean to leave you out, Mark. | 33 |
fomc | 1,978 | It might have been just as well, Mr. Chairman! If I could, I'd just make one comment on interest rates, since there seems to be so much concern about rising interest rates. We seem to accept easily the notion that if we want to look at real wages we adjust for inflation, and that if we want to look at what is happening... | 409 |
fomc | 1,978 | Thank you. We will now come to Willis. | 10 |
fomc | 1,978 | Thank you, Mr. Chairman. I am concerned about the momentum I see on prices, attitudes, and even real activity, in view of our past experience of waiting and then having to raise rates too sharply. I share Paul's feelings that I would rather do it now than later, as I felt last month. Therefore, I vote for alternative C... | 92 |
fomc | 1,978 | Thank you. John Balles. | 7 |
fomc | 1,978 | I will make this brief because my speech has already been given by several here, especially including Mark Willes. I think we do need to have a link between our short-run and long-term ranges. Unless we move at some point, we are going to have the overshoots everybody has complained about this morning. Therefore, I wou... | 94 |
fomc | 1,978 | Thank you very much, John. Bob Black. | 10 |
fomc | 1,978 | Mr. Chairman, I would go for 4 to 8 on M1 and 5-1/2 to 9-1/2 on M2. I'd adopt the federal funds range for alternative C, move immediately to 8 percent, and use an aggregates directive. | 57 |
fomc | 1,978 | Thank you. Roger Guffey. | 8 |
fomc | 1,978 | Thank you, Mr. Chairman. I think we have had quite a lot of movement [in interest rates] and, as a result, I'd prefer not to see an additional movement come out of this meeting. But to insure that we do indeed move if we have strong growth in the aggregates in the intermeeting period, the prescription that I would pref... | 212 |
fomc | 1,978 | Thank you, Roger. Bones. | 7 |
fomc | 1,978 | Mr. Chairman, I would like very much to see us continue to lean against the price trends. And I would like alternative C with the federal funds rate shown there, M1 at 4 to 8, M2 at 5 to 9, and an aggregates directive. | 57 |
fomc | 1,978 | Bob Mayo. | 3 |
fomc | 1,978 | Alternative C is acceptable to me, Mr. Chairman. I would not be in any hurry to get to 8 percent but if it comes naturally in the Desk's operations, I would just let the funds rate go to 8. I wouldn't want to see it go over 8; I would be a little uncomfortable about that without a meeting, but I think "C" is still my p... | 104 |
fomc | 1,978 | Thank you. Frank Morris. | 6 |
fomc | 1,978 | Mr. Chairman, I would like to support a federal funds range of 7-1/2 to 8 percent. I would stay at 7-3/4 until the aggregates triggered a move to 8 percent, but I would lower the triggering points to 3 to 7 for M1 and 5 to 9 for M2. | 72 |
fomc | 1,978 | But it is already triggered. By the projections we have, it is already triggered. | 17 |
fomc | 1,978 | It would be triggered if it came in over the projections. The projections are [for M1 growth of] about 7 percent. | 27 |
fomc | 1,978 | I will now say last but I will not say least, that's for sure. Larry. | 18 |
fomc | 1,978 | I would go with [the views of] either John Balles or Mark Willes. | 18 |
fomc | 1,978 | I thought so. I'm beginning to learn. Well, let me take a quick look at this. Let me suggest to you a couple of thoughts that I have. One is that I believe--and I have said this publicly--that we are in a period of difficult decisionmaking. It has been easy over the last year to raise the federal funds rate 300 basis p... | 92 |
fomc | 1,978 | [Unintelligible.] | 6 |
fomc | 1,978 | It has been easy to see all of that in a period when the economy was growing rapidly in real terms and there was considerable slack. Now we have had restraint on for some time. I guess my concern here is that continued restraint, while logical in economic terms, is likely to trigger a recession at this time. And if [we... | 448 |
fomc | 1,978 | [Unintelligible.] | 6 |
fomc | 1,978 | Well, let's ask the question. Mark, did you want to go to 8 percent immediately? | 20 |
fomc | 1,978 | Yes. | 2 |
fomc | 1,978 | And Willis, did you want to go to 8 immediately? | 13 |
fomc | 1,978 | The timing is not that important. | 7 |
fomc | 1,978 | So then it really is more like three 8s and the others around 7-3/4 and 7-7/8. I don't know whether or not we have the makings of something where we are all agreeable or not. I don't know if you like my suggestion of a very tight range and we don't go down in that range but could, and probably will, go up to 8 before t... | 88 |
fomc | 1,978 | Mr. Chairman, I would suggest that the 7-3/4 and 7-7/8 people are very close together. And 7-3/4 to 8 percent is an extremely narrow range; it is much more like a money market directive. How about going to 7-7/8 as the midpoint with that 7-3/4 to 8 percent range and make it a money market directive? | 89 |
fomc | 1,978 | I have no objection, personally. | 7 |
fomc | 1,978 | I think I would buy that. | 7 |
fomc | 1,978 | What does that mean, Chuck? You move to 7-7/8 immediately? | 18 |
fomc | 1,978 | Well, pretty soon. There is this financing-- | 10 |
fomc | 1,978 | I will tell you what Peter will tell you. He will have a hard time maintaining 7-7/8 because this is a very, very fine line, isn't it, Peter? | 38 |
fomc | 1,978 | I think it would be difficult to implement. Once we'd gotten there, then the market could perhaps over time be made to understand that is what we wanted. But the process of getting it up just 1/8 without everybody thinking we want it up 1/4 is impossible. | 57 |
fomc | 1,978 | You could tell them. | 5 |
fomc | 1,978 | Henry Wallich has a novel idea. He said "tell them," just like we have said we've always wanted to do. If Congress would let us, we'd issue the directive this afternoon! | 38 |
fomc | 1,978 | Who's on first? | 4 |
fomc | 1,978 | Chuck, I think I could buy your formulation if we took the ranges down to around 4 to 8. | 23 |
fomc | 1,978 | I think if you had a money market directive, you might be able to do that. | 18 |
fomc | 1,978 | Well, let's listen to Peter for a moment. You are going to have a hard time maintaining [an increase of] 1/8. | 29 |
fomc | 1,978 | I think it may be hard to achieve that 7-7/8 without overshooting. | 19 |
fomc | 1,978 | I think we all ought to be aware of that. | 11 |
fomc | 1,978 | [Unintelligible.] | 6 |
fomc | 1,978 | [Unintelligible.] | 6 |
fomc | 1,978 | It might not be the most undesirable thing in the world to have a little uncertainty just as to where that is and let it move. | 27 |
fomc | 1,978 | Can you operate between 7-3/4 and 8? | 14 |
fomc | 1,978 | I think so, but again, there would be a risk that the market could assume that we wanted 8 and it could take a while to batter it down from the 8 percent level. | 39 |
fomc | 1,978 | I would argue that the operating considerations that you have outlined probably are the best compromise for the diversion of the positions of the people on the [Committee]. That is, shoot at 7-7/8 and recognize that you may miss it [within] about the range of judgments that we have been discussing. | 62 |
fomc | 1,978 | Steve, do you have any thoughts? You usually have some good thoughts. | 15 |
fomc | 1,978 | Mr. Chairman, I certainly share Peter's view [given] that the market had been at 8 yesterday and it's at 7-15/16 today. It is going to be difficult to fine-tune it. So, I would think that it may be desirable for the Committee to decide whether it should stay right around where it is, whatever that is--if it's a 7-3/4 t... | 182 |
fomc | 1,978 | But an effort to hold it down to 7-3/4 would be difficult | 17 |
fomc | 1,978 | We are already at 7-7/8. | 11 |
fomc | 1,978 | Well, I think we at the Desk would like to have some idea in mind of what we are to aim for. | 24 |
fomc | 1,978 | If I understand these current projections, with the ranges we most recently discussed, you're almost at the point where you would go toward 8 anyway, unless instructed otherwise. | 33 |
fomc | 1,978 | Not with the money market directive. | 7 |
fomc | 1,978 | Well, not quite but darn close to it. | 10 |
fomc | 1,978 | Well, if you take 4 to 8, it really does cut it [close]. There is no question about it. | 26 |
fomc | 1,978 | All you have to do is have one week in July and you are in. | 16 |
fomc | 1,978 | Our projection is already 9. | 7 |
fomc | 1,978 | Mr. Chairman, I wonder if I might suggest something. I suggest that we formulate instructions to the Desk to resist 8 percent until the end of this week and early next week and then, checking the aggregates, move gradually on up. If it moves to 8, accept it but choose between 7-3/4 and 8. | 70 |
fomc | 1,978 | What is the Treasury situation this week? | 8 |
fomc | 1,978 | There is an auction of 1-year bills tomorrow and 2-year notes on Thursday. And then they will announce a week from tomorrow the terms of the August refunding, which will probably be about a 6 or 7 billion dollar [offering]. | 52 |
fomc | 1,978 | What is the proper thing to do if we expect to get to 8 percent? | 17 |
fomc | 1,978 | Mr. Chairman, may I suggest that the Committee could simply instruct the Manager to aim at a federal funds rate in the 7-3/4 to 8 percent range over the next few days, without making a strong restraining effort to reduce it. I think that the funds rate then could very likely be up around 7-7/8 to 8 percent because the ... | 160 |
fomc | 1,978 | Could that be bought by a majority of the Committee? | 11 |
fomc | 1,978 | We are in effect saying it's going to be played around 7-7/8 to 8 in the very next period. | 26 |
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