J. Alfred Broaddus Jr.

Mr. Broaddus dissented because he believed that the strength of investment demand, due possibly to an increase in the trend growth rate of productivity, required somewhat higher real interest rates to prevent inflationary pressures from developing. He was concerned that, with the economy already operating at a high level and labor markets apparently very tight, any increase in such pressures might be costly to reverse and might reduce the credibility of the Committee's longer-run strategy of promoting maximum sustainable growth by fostering price level stability. He also believed that the risk to the economy of a moderate further tightening was small given the apparent momentum of aggregate economic activity.

Mr. Broaddus dissented because he believed that a prompt move to somewhat greater monetary restraint was needed at this point. In his view, the current stance of monetary policy was overly accommodative in light of the signs of increasing price pressures and rising inflationary expectations that were associated with the continuing strength of the economic expansion and high levels of capacity utilization. In this situation, a delay in implementing some monetary policy tightening would incur a substantial risk of a further increase in inflationary expectations and could make it more costly to achieve the Committee's longer-term anti-inflationary goals.

Mr. Broaddus dissented because he believed that additional near-term tightening was necessary to contain inflation. The tightening actions implemented thus far this year were moderate by historical standards, and he doubted that they would prove sufficient to prevent higher inflation given the strength of the economic expansion, the minimal remaining margins of unemployed labor and other producer resources, and inflationary expectations that he feared might already be rising. Prior to the conclusion of this meeting, the members discussed the desirability of announcing the outcome of a meeting when no action to change policy was taken. Views differed on this issue, but most of the members supported a proposal to provide a brief and informal indication that the meeting had ended and that there would be no further announcements. Since early February, a statement had been released after each meeting, all of which had involved policy changes; failure to take some step after this meeting to make clear that there was no change to announce would lead for a time to a heightened degree of uncertainty. With regard to future announcements, it was understood that this issue along with other public disclosure questions would be considered at a later meeting. The Committee's decision regarding announcements would then be made public.

Messrs. Broaddus and Jordan dissented because they preferred a stronger move toward a more neutral policy stance. In their view, the recent sharp increases in longer-term interest rates indicated clearly that inflationary expectations were rising and that the principal policy risk had become one of remaining accommodative for too long a period. In this environment, they believed that a more aggressive move would underscore the Committee's commitment to fostering sustainable longer-term growth and reduce the risk that a highly restrictive policy might be required at a later date to contain inflation. The Committee then turned to a discussion of the desirability of making an immediate announcement of today's policy decision. All the members favored prompt disclosure in principle, but some expressed reservations about announcing today's decision immediately after the meeting. These members preferred to consider a decision on announcements of policy actions in the context of a broad range of disclosure issues, some of which had yet to be fully explored. Some stressed that they remained concerned about the inhibiting effects of some types of disclosures on the Committee's deliberations, and one member emphasized that