Prior discussion:
speaker: MR. KELLEY.
text: We are working hard to reformulate the guidelines to policy [to foster] new understanding when that's possible to do. I'm not sure when it will be possible to do, which is the only other point I would like to make. I think we have to discipline ourselves and probably educate the Congress and the public to the fact that it may take some time before it's possible to do that again. It may be a while before conditions are sufficiently stable for us to have some confidence that we understand where we are and for things to have settled down so we are able to reformulate our basic guiding stars. 
speaker: CHAIRMAN GREENSPAN.
text: Governor Mullins. 

MR. MULLINS. "What we lose is that we muddle the signal."

Full utterance: I would support your proposal. I do think there's a case for cutting [the range] a half point in 1993. It seems to me that it's simply time to do so in the normal rhythm of things. It was not unusual to skip last year. In the summer of '88 the Committee cut the ranges for the following year, skipped '89, cut in '90, and skipped '91. The difficulty is that it's '92 now and in the normal pattern it would be time to move. It would put the market on notice, independent of federal funds rate moves and other policy moves. The difficulty I see--and the reason I would agree with your proposal--is that it's simply difficult to send a clear signal in the current environment with the context of a distorted M2; it's difficult to separate the policy target from the questions of distortions of M2. What we lose is that we muddle the signal. I think there's no way to avoid the suspicion that we're moving the target down in part because M2 is weak. And I think we would have a better signal of long-term policy and our targets after this is better understood. It's unfortunate because we are moving up to a period where we have the capacity for reassessment of that inflation premium that Governor Angell talked about. And I am concerned when I look at what the market expects later this year and next year: They expect rates to go up. By setting the fed funds rates we'll get precious little market information on when to do that. Money hasn't been a reliable signal. So, I am a bit concerned that we'll find ourselves following the market up, lagging, and chasing credibility. And one way to try to get ahead of it is to put the market on notice and send the signal early. I think we'll have a much clearer picture in the months ahead; and maybe we will not have to wait until February because I tend to think that much of this may be transitory. We'll see how the time deposit refugees feel if the stock market gets a little cool here! I do expect the yield curve to flatten in at least two ways. And I think the de-leveraging is running its course. It is true that we have these higher costs of intermediation which have already given the banks all-time record profits in the first quarter. So, they seem not to be suffering too much. Therefore, I think there is a case for cutting the ranges at this time. But the difficulty is that we would lose the signal in this environment, so I would support your proposal.

Opinion: yes
About monetary policy: yes