Treasury Secretary, G. William Miller said today that a period of "national austerity" is needed to wring out inflation, implying that higher interest rates might be in the offing.
"We are headed in the right direction and are determined to stay the course," Miller told the joint annual meeting of the World Bank and International Monetary Fund.
Before his formal address, Miller told newsmen that the U.S. would pursue policies "no matter how difficult they are" by giving top priority to defeating inflation.
Asked whether interest rates were enough to accomplish that purpose, Miller responded that interest rates are a by-product of other policies.
"The real question," Miller said, "is whether monetary policy is restricting the growth of money and credit. Our policy is to reduce the rate of growth of money and credit, and interest rates are a reflection of that policy."
He responded similarly to a question whether U.S. and German interest rates -- which have been ratcheting up -- are properly aligned. The implication seemed to be there would be no hesitation in allowing interest rates to go higher, if necessary to pursue money supply targets.
On other key issues of concern during this week's international financial meeting, Miller at the news conference:
Refused comment on any possible new U.S. policy in relation to gold prices or sales. "A secretary of the Treasury is not able to comment on such things," he said. But he added later that "everyone seems to want to get in and make a fast buck."
Said that in his discussions here with oil exporting countries, he had detected no inclination that they intend to price oil in anything but dollars. He suggested that OPEC probably figured "it is no time to shift away from a currency that may have fundamental improvement in the next few years."
Brusquely brushed aside European expressions of "no confidence" in the dollar or in the Carter administration by saying: "Our objective is to gain results and not seek popularity . . . Those who expect instant results will be disappointed."
In the formal address, his most comprehensive economic policy speech since taking office, Miller reiterated in several different ways the American commitment to maintain not only general exchange market stability, but specifically to stabilize the rate of the dollar against the German mark.
He stressed in sober language that the main goal of nations individually and collectively is to restore "balanced growth to the world economy," and acknowledged that "my country, as the largest economy in the system, is determined to carry out that responsibility in full."