Fed Is Leaning Toward Cutting Money Target --- Greenspan, on Capitol Hill, Says Questions on M2 Kept Aides From Acting
WASHINGTON -- Federal Reserve Chairman Alan Greenspan said officials of the central bank are leaning toward lowering their targets for money-supply growth but haven't yet made the move because they haven't finished studying its implications.</br></br>Mr. Greenspan, appearing before a House Banking subcommittee, said Fed policy makers recently discussed bringing the ranges down another notch "to conform to our long-term goal of price stability." He called the current ranges "still a fraction higher than they should be."</br></br>But the Fed elected to delay such a step, Mr. Greenspan said, until it has a better grasp of the connection between current money-supply figures and the overall economy. "What we did not want to convey to the Congress is that we have some insight . . . that we do not have," he said.</br></br>Asked by panel chairman Stephen Neal (D., N.C.) whether the Fed is "closing in on a better understanding," Mr. Greenspan answered, "Yes." Earlier, he said that the Fed's policy-setting committee would revisit the issue no later than its meeting next February.</br></br>In the past, setting the targets has been a source of tension within the Fed. Hardcore inflation fighters want to lower the targets to underscore the central bank's commitment to bringing down inflation. But other Fed officials, including those who are more concerned about fostering short-term economic growth than further reducing inflation, have resisted.