FEBRUARY FOMC VOTES UNCHANGED MONETARY POLICY The Federal Open Market Committee at its February 10-11 meeting voted nine to one to maintain the then-existing degree of reserve restraint, minutes showed. The FOMC issued an asymmetric inter-meeting policy directive which gave greater possibility to firmer rather than easier policy. The Committee set a six to seven pct January through March annualized growth target for M-2 and M-3 and no M-1 goal. At the prior meeting in mid-December, the FOMC set a seven pct target for M-2 and M-3 for November through March. The February FOMC kept the four to eight pct Federal funds rate "reference" range for policy, as in other recent meetings. At a telephone conference on February 23, committee members discussed the possible implications of the decisions reached in Paris for U.S. intervention in foreign exchange markets. No conclusions were contained in the minutes. In its inter-meeting policy directive, the February FOMC said that "somewhat greater reserve restraint would, or slightly lesser reserve restraint might, be acceptable depending on the behavior of the aggregates, taking into account the strength of the business expansion, developments in foreign exchange markets, progress against inflation, and conditions in domestic and international credit markets." The February FOMC voted nine to one for an unchanged policy. Thomas Melzer, St Louis Federal Reserve Bank president favored some tightening of reserve conditions. He noted the strong growth in bank loans in November through January and the firm federal funds rate that had prevailed despite the extraordinary pace of reserve growth. He also cited the recent declines in the dollar's value. Finally, looking ahead, Melzer pointed out the potential for a further rise in inflationary expectations. He believed that prompt restraints might avert the need for more substantial tightening later. Regarding inter-meeting policy adjustments, the FOMC minutes showed, "the members generally felt that policy implementation should be especially alert to the potential need for some firming of reserve conditions." In this view, the FOMC said somewhat greater reserve restraint would be warranted if monetary growth did not slow in line with current expectations and there were concurrent indications of intensifying inflationary pressures against the background of stronger economic data. One indication of potential price pressure might be a further tendency for the dollar to weaken. The minutes showed that one member, presumably Melzer, preferred a directive that did not contemplate any easing during the weeks ahead. However, "most of the members did not want to rule out the possibility of some slight easing during the inter-meeting period, although they did not view the conditions for such a move as likely to emerge." The FOMC members assumed that future fluctuations in the dollar's value would not be of sufficient magnitude to have any significant effect on the Fed's economic projections. In addition, they anticipated that considerable progress would be made in reducing the federal budget deficit.