President Reagan's four appointees to the Federal Reserve Board voted as a bloc Feb. 24 to force the central bank to cut its discount rate over the objections of Chairman Paul A. Volcker.
Within hours, however, Wayne Angell, one of two new members on the board, requested another meeting, at which he changed his vote before the earlier action could be announced.
Ten days later, amid signs that the U.S. economy was growing more slowly than expected, and after West Germany and Japan cut their rates, the board voted unanimously to cut the discount rate -- how much it charges financial institutions for loans -- from 7 1/2 percent to 7 percent.
Former Fed officials said they could recall no other occasion when a discount-rate cut was approved and then withdrawn before it was announced.
Martha Seger, one of the four Reagan appointees on the seven-member board, said yesterday that the 4-to-3 vote "signified some independence" from Volcker on the part of the Reagan majority.
The Federal Reserve "is not supposed to be a one-person show," she declared. "I would hope that's the message."
Financial market analysts spent much of yesterday trying to assess the impact of the original vote on future Federal Reserve policy.
Some analysts said they expect the Reagan group to seek lower interest rates and faster economic growth. That may mean an acceleration of inflation later, they said.
But while the vote indicated that Volcker has lost at least some of his ability to shape monetary policy decisions, the cohesiveness of the four Reagan appointees was not clear, as demonstrated by Angell's change of heart.
In addition, most basic monetary policy decisions other than discount-rate changes are made by the Federal Open Market Committee, a 19-member group that includes the seven Fed board members. The other FOMC members are presidents of regional Federal Reserve banks -- only five of whom are allowed to vote at any one time with the Fed governors. Most of the bank presidents have regularly supported Volcker in the past.
Syndicated columnists Rowland Evans and Robert Novak first reported the initial 4-to-3 vote.
Only once in recent years, in 1978 when G. William Miller was chairman, was a Fed chairman ever on the losing end of a discount-rate vote, according to Fed officials.
Volcker, who has expressed fears that a unilateral rate cut could trigger a loss of confidence in the U.S. dollar on foreign-exchange markets, may have used that argument to persuade Angell to change his vote. All other things being equal, lower interest rates often are followed by declines in a currency's foreign exchange value.
At the time of the February vote, attempts were already under way between the Fed and central bankers in Japan and West Germany to reach an agreement on a series of nearly simultaneous rate reductions intended to spur faster economic growth in each country.
U.S. government sources said that Volcker had agreed in principal to a discount-rate cut prior to a January meeting of finance ministers and central bankers from the United States, Japan, West Germany, France and Britain in London.
On the evening of March 6, 10 days after the original 4-to-3 vote and after the German and Japanese rates had been cut, the Fed board voted again to reduce its discount rate.
That time the vote was 6 to 0, with Volcker and governors Emmett J. Rice and Henry Wallich going along. Seger was absent.
The other Fed governors originally favoring the cut were Vice Chairman Preston Martin and Manuel Johnson, who, until he was sworn in last month along with Angell, was assistant Treasury secretary for economic policy.
The Associated Press yesterday quoted sources close to the Fed as saying that Johnson spearheaded the effort to out-vote Volcker.
In an interview last week before news of the original vote became known, Martin insisted that he and the other Reagan appointees were not acting as a group to seize control from Volcker. "It's a different board, but these are seven individuals who will vote his or her conscience," Martin said. "While the four Reagan appointees have some things in common, we also have some differences."
Those differences include varied backgrounds and coming from different parts of the country, he said.
Martin, referring to the 6-to-0 vote, said he had voted for the cut because he felt "that some slight additional stimulus was needed. It is here now."
In her remarks yesterday, Seger said that she sees little chance either of recession or a pickup in inflation in 1986. The good inflation news "gives the Fed latitude to have easier money policy," she said, adding that there is "some risk that our economic performance may be a little disappointing."