The name of Henry Wallich was omitted Saturday in an article that listed members of the Federal Reserve's Board of Governors who supported a tightening of monetary policy at the May meeting of the Federal Open Market Committee.
The Federal Reserve's policymaking group decided May 24 in an unusually close 7-to-5 vote to begin to tighten credit conditions slightly to slow very rapid growth of the money supply at a time when the economic recovery was accelerating, according to minutes of the meetings released yesterday by the Fed.
On June 23, with money growth and the economic recovery still speeding up, members of the group, the Federal Open Market Committee, conferred by telephone and reached a consensus that another, very slight increment of restraint in providing reserves to the banking system was necessary, the minutes said.
The FOMC did not expect its modest actions to slow money growth right away, and it has not. The central bank also reported yesterday that M1, the money supply measure that includes currency in circulation, checking deposits and travelers checks, rose $5.8 billion in the week ended July 6. The increase keeps M1 far above the upper limit of the Fed's target range for this year.
Partly as a result of the Fed's tightening, some short-term interest rates have risen more than a percentage point since May. The key federal funds rate--the interest banks charge when they lend reserves to each other--which is heavily influenced by the rate at which the Fed makes reserves available, has gone up about three-fourths of a percentage point. The rate yesterday was about 9 1/2 percent.
The FOMC held another meeting this week at which it reviewed its money growth targets for the remainder of this year, set tentative targets for 1984, and agreed upon a separate short-term money supply objective. As usual, no announcement of its decisions was made.
However, Federal Reserve Chairman Paul A. Volcker, who will disclose the annual money growth targets in congressional testimony next Wednesday, said Thursday that no "dramatic" actions were taken at this week's meeting.
Analysts said Volcker's comment did not necessarily rule out the possibility that the FOMC may have decided to add yet another small degree of restraint, particularly given the continued rapid growth of M1 and mounting evidence of a vigorous recovery.
The big M1 jump reported yesterday had been expected by many analysts, but it left the money measure at $514.1 billion, about $16 billion above the upper limit of the 4 percent to 8 percent growth set for the aggregate during 1983.
The Fed reported that a broader aggregate, M2--which also includes money market deposit accounts, savings deposits and small time deposits at financial institutions, most money market mutual fund shares and some other items--rose in June to a level of $2.115 trillion.
At that level, M2 remains just within the upper limit of its target range. Some of the five dissenters at the May meeting cited this more modest behavior of M2, to which the committee officially is giving more weight than M1, as one reason there was no need to tighten at that time.
But the majority felt "that slightly greater restraint on reserves would be desirable at this point to minimize the possible need for more substantial restraint later, reducing the interest rate impact on financial markets over time and helping to sustain the economic expansion," the minutes said.
The majority, led by Volcker, also believed a tightening now could have "a favorable effect . . . on market perceptions about monetary policy and the outlook for containing inflation, with the consequence that prospects for stable or declining interest rates in long-term debt markets would be enhanced as the recovery proceeded."
Voting with Volcker were Fed Vice Chairman Preston Martin and governors J. Charles Partee and Lyle E. Gramley, as well as Federal Reserve Bank presidents Silas Keehn of Chicago and Theodore H. Roberts of St. Louis.