The new chairman of the Federal Reserve Board said yeseerday that if government, business and labor do not cooperate to reduce the rate of inflation now, price increases could become so severe that the administration would be forced to take harsh measure in the future.
G. William Miller said that the anti-inflation program the president is supposed to announce within the next few weeks should "deal with actions rather than just suggestions of possible actions."
The president already has urged business and labor to moderate their demands this year to reduce the underlying rate of inflation by one-half percent. Carter also has been provided with a list of actions - such as holding down the increase in federal pay and ordering federal agencies to examine the inflationary impact of their fulemaking.
In a meeting with a small group of reporters, Miller said that, if the early round of presidential action and voluntary efforts on the part of business and labor don't work, the government would have to consider steps such as removing import quotas on meats or the new trigger prices for steel imports.
The central banker said the so-called underlying rate of inflation has worsened in recent months and, if it continues to do so, the medicine "will get stronger."
Miller also said that the "hopes and aspirations" of full employment and continued economic growth advocated by the influential congressional Joint Economic Committee in its annual report last Monday "have to be re-examined in the light of inflation."
The committee called for the Federal Reserve to let the money supply - checking accounts and currency in circulation - grow faster than the central bank has said it wants to. Miller has advocated a gradual slowdown in the expansion of the money supply as necessary to reduce the rate of inflation.
Miller said that society cannot reach the goals of full employment growth and price stability independently. "We will get there only if we get all of them," he said in his first meeting with reporters since being sworn in two weeks ago.
"We cannot have full employment of there is runaway inflation. We cannot have price stability if there is high unemployment," the former chief executive of Textron Corp. maintained.
That will require prudence in the conduct of monetary policy, he said.
Miller broke little new ground in the hour-long session, mostly expanding on ideas he already has presented to Congreess either in his long, controversial confirmation hearings before the Senate Banking Committee or more recent appearances before the House Banking and Senate Budget committees.
He said that long-time interest rates probably will contine to drift upward "moderately" for most of the year and said that the Federal Reserve is taking action to stem inflation" by holding down money growth. He noted that blowups in short-term rates due to a restriction on money growth often result in a flattening of long-term rates.
Second, Miller said, the Fed often is asked to comment on taxing and spending policy and how they relate to monetary policy. The Fed can exercise its leadership by "creating a climate of greater awareness of the dangers" of policy actions that inflationary, he said.
He repeated earlier statements that, if market rates continue to rise, the government may have to raise the ceilings it sets on the amount of interest that banks and savings and loan associations can pay on savings accounts.
However, he noted, savings and loan associations - which provide most of the funds available for home mortgages - are in better shape to withstand a siege of higher interest rate than in 1974. When rates on investment such as Treasury bills rise above the ceilings on savings deposits to invest in more-generous-yielding securities.
Miller said that the continued decline of the dollar is bound up with the inflation and energy problems.He repeated his argument that, if Congress does not pass some form of tax on crude oil shortly, the president will have to act unilaterally to reduce consumption by imposing a fee on oil imports.