Signs of Economic Strength, Inflation Caused Fed to Tighten Credit in March
WASHINGTON -- Surprising strength in the U.S. economy and a determination to respond quickly to hints of renewed inflation caused the Federal Reserve to tighten its grip on credit in late March, newly released minutes of Fed meetings show.</br></br>The decision to reverse course, which had been widely reported but not previously confirmed by the Fed, led to higher interest rates immediately after the March 29 meeting of the Fed's policy-making Open Market Committee. The minutes of the meeting were released Friday after the customary seven-week delay.</br></br>The Fed tightened credit again in early May because of continued fears of inflation. That move wasn't covered in the minutes released Friday. The Open Market Committee held a regularly scheduled session last week at which it apparently didn't change its credit position.</br></br>The minutes of the Open Market Committee offer one of the few ways for outsiders to get a glimpse of the Fed's deliberations. Before the March 29 meeting, economists generally predicted that the Fed wouldn't tighten credit. But at the meeting, only one of the 11 committee members, Fed Governor Martha Seger, dissented from the tightening move.</br></br>Among the others, the only disagreement was a matter of degree. "Most indicated a preference for only a slight move toward restraint, at least at this time, but a few urged somewhat greater tightening," the minutes say.