Know Your FOMC Dissenter
slate.msn.com
By Rob Walker
Rob Walker, a journalist living in New Orleans, writes Slate's Moneybox. You can e-mail him at moneybox@slate.com.
Posted Monday, July 2, 2001, at 10:30 a.m. PT
As noted in last week's column on Fed officials who happen not to be Alan Greenspan, dissenting votes in Federal Open Market Committee meetings are rare, particularly when compared with, say, Supreme Court votes. Unlike judicial bodies generally, the FOMC strives for consensus. So it's worth following up to note that, late last week, the minutes of the FOMC's May 15 meeting were released, and there was in fact a dissenting vote. The one voting member to oppose cutting the Fed funds rate by half a percentage point was Thomas Hoenig, who preferred a quarter-point move. This was the first dissenting vote since 1999.
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What's his beef? According to those minutes, he "expressed a strong preference" for a quarter-point cut, and two other members—not named—"indicated that they could have accepted that more limited easing move." Elsewhere, the minutes add three sentences summarizing Hoenig's concerns. In a nutshell, the "rapid and aggressive" series of rate cuts the Fed has already introduced means that a "more cautious" action might have been more appropriate, to "limit the risks of an overly accommodative policy stance and rising inflation over time." Hoenig has been fairly consistently described in the press as an inflation hawk |
