Fed Held Line On Money Despite Cut: But Easing Possible
! Federal Reserve policy makers, meeting a few days after the Fed's discount rate had been cut from 8 percent to IV-i percent, agreed not to ease monetary policy further, Recording to a record of the May 21 meeting released yesterday.</br></br>Û¢ However, a majority of the jgroupÛÓthe Federal Open Market (Committee, or FOMCÛÓwas concerned about the economyÛªs relatively weak performance and strains in financial markets and ÛÏbelieved that policy implementation Should be alert to the potential need for some easing of reserve conditions,Û the statement said.</br></br>' Such language indicates a shading of FOMC sentiment toward an easier policy course rather than a neutral or a tighter position. The Fed seeks to influence financial markets and the economy in part by varying the availability of reservesÛÓcashÛÓto financial institutions.</br></br>Different members of the FOMC had varying views about the importance of the fact that the money measure Ml was well above its target range. In the end, one voting member, Robert Black, president of the Richmond Federal Reserve Bank, dissented from the majority position because ÛÏhe preferred to direct policy implementation in the weeks immediately ahead toward achieving somewhat slower expansion in Ml,Û the statement said.</br></br>The majority expected that the policy course they laid out would be consistent with growth of MlÛÓthe money measure that includes currency in circulation and checking deposits at financial institutionsÛÓat a 6 percent annual rate or a little more between March and June.