President Reagan said Paul Volcker hasdeclined to serve another term as chairman of the Federal
Reserve Board, the U.S. central bank. Reagan
nominated economist Alan Greenspan in his place.
    Volcker's term expires in August.
    Reagan, in a brief announcement in the White House briefing
room, said he accepted Volcker's decision "with great reluctance
and regret."
    Volcker, first appointed to the Fed post by President Jimmy
Carter in 1979, said "there is a time to leave and a time to
come ... I have no feeling I was being pushed."
    Volcker, appearing with Reagan, Greenspan, and Treasury
Secretary James Baker in the briefing room, said he will remain
on the job until Greenspan's nomination is approved by the
Senate.
    In a tribute to a smiling Volcker standing beside him,
Greenspan told reporters that one of the departing chairman's
greatest achievements was reducing inflation.
    "It will be up to those of us who follow him to be certain
that those very hard won gains will not be lost. Assuring that
will be one of my primary goals," Greenspan said.
    Financial markets reacted with dismay at the departure of
Volcker, who has been widely credited with holding the line on
inflation and seeking to maintain stability in currency values.
    Immediately following Reagan's announcement, the U.S.
dollar weakened sharply against all major currencies and both
the bond and stock markets declined.
    But Greenspan told reporters he thought the dollar, which
has fallen sharply over the past year, has reached its low
point.
   
    "There certainly is evidence in that direction," Greenspan
said when reporters asked if the dollar has bottomed out.
    The market reaction was probably exaggerated by surprise
because the announcement followed a number of published reports
that the White House had decided to reappoint Volcker.
    Volcker's tenure at the Fed began under the cloud of major
inflation under Carter with consumer prices rising more than 10
per cent annually and the prime interest rate exceeding 20 per
cent.
   
    With Reagan's backing, Volcker pursued a tight money policy
that cut inflation to about three per cent annually and reduced
interest rates to their lowest level in nearly a decade.
    The tight money policies were also blamed for producing
a deep recession in 1981 and 1982 that caused major political
problems for Reagan.
    Reagan reappointed Volcker to the chairmanship in 1983.
   
    Greenspan, who heads his own Wall Street consulting firm,
was chairman of President Ford's Council of Economic Advisers
from September 1974 until January 1977.
    Greenspan, a Republican, is considered a traditional
conservative economist and has been an adviser to several
presidents.
 Reuter
