Prior discussion:
speaker: MR. PARRY.
text: Given the present stance of policy, we are running a substantial risk that the future trend of inflation will be in an upward direction. Inflation accelerates in 1995 in the Blue Chip consensus and in both the structural and vector auto-regressive models used by our staff. In our structural model, a significant rise in the funds rate in 1996 is required through the nominal income policy rule that is built into our structural model. Thank you. 
speaker: CHAIRMAN GREENSPAN.
text: President Hoenig. 

MR. HOENIG. "On the national front, we like others, see GDP growth going forward above its potential if we leave policy unchanged and we also see the inflation rate pushing up well above 3 percent next year."

Full utterance: Mr. Chairman, the Tenth District continues to grow at a very healthy pace. Construction activity remains strong, although perhaps somewhat slower than the boom environment we saw just a few months ago. Manufacturing continues to improve, especially in durable goods, and we have seen continued employment growth there. Oil activity appears to be strengthening due to the firming in prices; that is no surprise. The agricultural sector will be okay, as record yields in a couple of the crops will be offsetting the lower prices that are expected. And the cattle market has strengthened as well. From what we see, our economy in the region should continue to be strong going forward. I want to share with you some data and anecdotal information that we have on bank activity in our District. We have seen some increased interest in the use of the discount window in the last several weeks. For all District banks, loan-to-deposit ratios have increased from about 56 percent in March to an estimate of about 65 percent in June. At banks that inquired about borrowing, loan-to-deposit ratios have increased from around 60 percent to almost 75 percent. So we are seeing some liquidity interest there. This reflects loan growth of about 14 percent in our District. The reason given by banks for this growth is very strong loan demand across the board, not just in agriculture. It's interesting that this also is true of our larger banks; some of the smaller banks that have come and asked us about borrowing have indicated that their upstream banks have been less willing to lend to them because of their own liquidity needs associated with outside lending, which is reflected in their increase in loan-to-deposit ratios as well. This is supported to some extent by the fact that deposit growth in our banks, on which they rely heavily, has grown at about half the rate of that for loans. Also, both the larger and smaller banks around the District report that they have eased their credit standards, that the loan demand is there, and that the banks want to make loans. We see some heavy competition throughout the District for loans. So the banking environment has changed, I think rather dramatically, in the last two years. On the national front, we like others, see GDP growth going forward above its potential if we leave policy unchanged and we also see the inflation rate pushing up well above 3 percent next year. So basically, we are in agreement with the staff's forecast and see some increasing pressures in the future.

Opinion: yes
About monetary policy: yes
Stance toward easing (NLI): ambiguous