[Congressional Record Volume 142, Number 133 (Tuesday, September 24, 1996)]
[Senate]
[Page S11136]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  NO CHANGE IN THE FEDERAL FUNDS RATE

  Mr. DORGAN. Mr. President, the first point is that the Federal 
Reserve Board apparently now has broken up its meeting today and 
announced that there will be no change in the Federal funds rate--the 
interest rate that the Federal Reserve sets that has a significant 
impact on our economy, obviously.
  I have been a frequent critic of the Federal Reserve Board. I would 
say that, if they have decided not to increase interest rates today, I 
commend them for that decision. I think it is the right decision.
  The Federal funds rate is already one-half of 1 percent above where 
it ought to be historically, given the rate of inflation. There is no 
justification for an interest rate increase by the Federal Reserve 
Board. Inflation is under control--well under control--coming down 5 
years in a row. Last month there was a one-tenth of 1 percent increase 
in the Consumer Price Index, virtually no inflation. So there was no 
basis for the Federal Reserve Board to consider an interest rate 
increase.
  Some have suggested the Fed would meet in secret today if they wanted 
to, go in the room, shut the door, and make the decision in secret, and 
it would in effect increase interest rates today in order to respond to 
what they consider to be the need in the marketplace. But the Fed 
apparently decided not to do so. Again, I want to say that I think that 
is the right decision for this country, and for our economy because 
they ought not fight a foe that does not exist with remedy that is 
inappropriate. That is what they would have done, if they had increased 
interest rates today.
  I found it interesting the other day that the Washington Post had a 
story saying the FBI has been called out to find out who leaked 
information at the Fed about what the regional Fed bank presidents have 
recommended with respect to interest rates. I would much sooner see the 
FBI called out to find out who withheld information from the American 
people, and what they talk about is the incredible secrecy of this 
institution called the Federal Reserve Board. Would it not be nice if 
everyone could have all the information about how and when they make 
decisions about monetary policy instead of calling the FBI out to find 
out who leaked information so the American people have some knowledge 
about who was recommending what on interest rate policies?

  Mr. President, thank you. That is therapy for me to get that off my 
chest this early after the Federal Reserve Board met and apparently 
made the right decision. There is an old saying. ``Even the stopped 
clock is right twice a day.'' I will not compare the Fed to a stopped 
clock, but at least to say that the Fed is right on interest rates. 
They did not change the rate. There was no justification in making a 
change, and they should not have made a change.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. DORGAN. I thank the Chair.
  (The remarks of Mr. Dorgan and Mr. Ashcroft pertaining to the 
introduction of S. 2108 are located in today's Record under 
``Statements on Introduced Bills and Joint Resolutions.'')
  Mr. SANTORUM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Pennsylvania.

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