Fed Rejected More Curbs, Minutes Show
Days after raising two key interest rates, Federal Reserve policymakers decided at a mid-August meeting not to tighten monetary policy further, according to a record of the meeting released yesterday.</br></br>However, the members of the central bank's policymaking group, the Federal Open Market Committee (FOMC) remained concerned about inflation prospects. A number of FOMC members indicated that they expected to have to boost interest rates again in the near future to slow economic growth enough to head off rising inflation.</br></br>A majority agreed that it "would be acceptable" to make cash less readily available to the banking systems in the weeks following the meeting, "depending on indications of inflationary pressures, the strength of the business expansion, the behavior of the monetary aggregates, and developments in foreign exchange and domestic financial markets."</br></br>On the other hand, making cash more readily available "might be acceptable," depending on economic developments, the Fed statement said.</br></br>Even that tilt toward a tighter policy and higher interest rates was not strong enough for Lee Hoskins, president of the Federal Reserve Bank of Cleveland, one of the 12 voting members of the committee. He dissented "because he preferred a policy that would give less emphasis to near-term business conditions and exchange rate considerations and greater emphasis to the longer-term objective of price stability," the record said.