Fed's Angell Reissues Call For No Inflation
WASHINGTON - Wayne Angell, a leading anti-inflation force on the Federal Reserve Board, said the central bank is making progress toward price stability but has not fully achieved it.
Reacting to the 0.2% increase in August producer prices reported Thursday by the government, Mr. Angell said, "I tend to look at the year-to-year change rather than one month." The 12-month increase, at 2%, "is the benchmark," he said. "It's important to get that down to zero."
Speaking to the National Grain Trade Council, he defended price stability as a way to foster investment and trade.
Policy Fluctuations Decried
"Repeated accelerating and braking of policy wastes economic resources and lowers the welfare of nations," Mr. Angell said. "Needless to say, the Fed is trying to avoid these costs by pursuing the goal of price stability."
Trade policies that encourage growth reduce the temptation to use monetary policy to boost short-term growth, he added.
"Higher growth rates mean that reducing inflation becomes an easier task," the Fed governor said.
Mr. Angell said he would like to see the Uruguay Round of the General Agreement on Tariffs and Trade negotiations "drawn to a successful and prompt conclusion to curb tariffs and the use of quotas in agricultural and other trade."
Loans to Soviets Opposed
He also told the grain exporters that it would be a mistake for the United States to go beyond humanitarian aid and lend to the Soviet Union. The biggest task facing the Soviets is developing a monetary system with hard currency, he said.
Such a system would bring goods back into stores, Mr. Angell said, since consumers would again be willing to hold their currency, which has depreciated dramatically as inflation has increased toward 1,000%.
Asked about the trade dispute between the United States and the European Community over farm subsidies, Mr. Angell said it was wrong for Europe to subsidize farm products and sell them in the Third World at reduced prices.