Greenspan Granted Leeway on Rates: Fed Panel Gave Chairman Power to Act on His Own
Divided Federal Reserve officials decided at a policy-making session in May to leave short-term interest rates unchanged but expressed growing concern about inflation by giving Chairman Alan Greenspan the leeway to raise rates on his own, according to minutes of the meeting released yesterday.</br></br>Highlighting the FedÛªs dilemma of having to pick a course for interest rates that could deal with both accelerating inflation and slower econom- ic growth, the officials agreed to a suggestion from Greenspan that the group's views be sought by telephone before he acted.</br></br>The minutes indicate the 12 members of the Federal Open Market Committee, the central bank's top policy-making group, had a variety of opinions about what policy to adopt</br></br>Fed Board member Wayne Angell dissented from a 10-person majority to call for an immediate increase in rates to signal the FedÛªs ÛÏcontinuing commitment to the eventual achievement of price stability,Û the minutes said.</br></br>The other dissent came from Edward Boehne, president of the Philadelphia Federal Reserve Bank. Boehne did not believe that inflation was a major worry. Indeed, he said there was the possibility that the economy could slow down to the point that the Fed would want to cut rates rather than raise them, according to the minutes.