President Reagan is slowly remaking the influential Federal Reserve Board of Governors. By picking two new members of the powerful board late last week, the President may increase the amount of internal dissent at the Fed, analysts say. Fed chairman Paul A. Volcker may have a slightly more difficult time controlling the nation's monetary policy machinery.
But Mr. Volcker is still expected to be the dominant force at the Fed. No major shift in the Fed's policy for setting credit conditions is expected nor is Volcker seen as any more likely to leave for the post of World Bank president, Fed watchers say.
Mr. Reagan late Thursday named Kansas farmer and banker Wayne D. Angell to fill an unexpired term on the Fed's board ending in 1994. He will succeed Lyle Gramley who resigned to become the chief economist of the Mortgage Bankers Association. Manuel H. Johnson, assistant Treasury secretary for economic policy, was named to succeed J. Charles Partee for a 14-year term beginning in February.
The seven Fed governors supervise the operation of the Federal Reserve System. Perhaps their most influential role is as members, along with the presidents of five district Federal Reserve Banks, of the Federal Open Market Committee. The FOMC meets periodically to set monetary policy that has a major effect on interest rates in the US and thus on the course of the economy.
With the two governors Reagan had appointed previously, his new nominations, if approved by the Senate, mean that he will have named a majority of the governors and one-third of the policy-setting FOMC. The President also appointed Fed vice-chairman Preston Martin and Fed governor Martha Seger.
On occasion, the two current Reagan appointees have dissented from board decisions, arguing in favor of a more stimulative, growth-oriented policy.
The average citizen will ``not notice much of a difference'' as a result of the coming changes at the Fed, says David Berson, a Fed watcher at Wharton Econometric Forecasting Associates. But he says ``it will become more difficult for Volcker,'' who will have a voting majority on the FOMC, but not among the governors.
While FOMC discussions may be more acrimonious as the panel hammers out a consensus, ``there will not be a major shift in policy as a result of these two appointments,'' says David Jones, senior vice-president of Aubrey G. Lanston & Co., a government securities dealer.
One reason Fed policy is unlikely to change is that although the board appointments ``have enormous importance to monetary policy,'' the swing of even four votes on a 12-member panel does not ``tip the balance,'' says Paul Boltz, vice-president of T. Rowe Price Associates Inc., an investment advisory firm.
Given the independence that comes in part from the governors' long terms, appointees often surprise presidents and Fed watchers. For example, Lyle Gramley, whom Mr. Angell will replace, was seen as somewhat liberal during the time he served on President Carter's Council of Economic Advisers, Mr. Berson notes. But he ``became a hard-liner'' on fighting inflation, Berson notes.
The current appointments are compromises on the administration's part, since it ``could have picked two strong inside President's men for these two spots -- along the mold of Preston Martin,'' who favors a more stimulative policy, Mr. Jones says. Instead Jones says the President picked only one such supply-side-oriented individual, Manuel Johnson. He ``has not said a lot about monetary policy except he wanted it to be more expansionary,'' Mr. Boltz said.
Mr. Angell's views are less well known. An economics professor at Ottawa University in Kansas, he has a reputation as a monetarist but rejects labels as simplistic. (Monetarists view changes in the money supply as a major determinant of future economic growth and inflation.)
Senate majority leader Robert Dole (R) of Kansas was a strong booster of Angell at least in part because of his farm expertise. Senator Dole's office released an essay by Angell calling for monetary policy to be set so that the price of a market basket of commodities would not swing more than 10 percent up or down.
A monetary policy guided by commodity-price movements has been suggested by prominent supply-siders. But Jones says the essay is likely to be an example of theoretical work done before the Fed appointment. ``He fits the mold of a typical new Fed member'' who is pretty pragmatic and supports Volcker, although not to the same degree his predecessor, Mr. Gramley, did.