Tight Money Policies Seen Failing in Intent: Fed Critics Loans Mounting Might Have Been Worse
Doubts are growing that the Federal Reserve BoardÛªs tight money policy, generally considered to date from last Dec. 6, has done what it was intended to do.</br></br>On that day the independentÛª Fed raised its discount rate from 4Vå£ to 5 per cent and, more importantly, lifted the permissible ceiling on commercial banksÛª time deposits from 4V2 to 5% per cent.</br></br>It did so in the face of public appeals from Treasury Secretary Henry H. Fowler and others to delay action until monetary policy could be meshed with fiscal action when Federal budget outlines became clear a month later.</br></br>Û¢	Contracting the lending power of banks by letting their free reserves (excess reserves less borrowings from the Reserve System) fall to a negative $380 million average in the past free months from the minus $100 million to $150 million level that prevailed last fall.</br></br>Û¢	Permitting the growth in the money supply to fall to an annual rate of 2.5 per cent since last November from 4.7 per cent for all of 1965 and 4.3 per cent for 1964.